MGJ..interesting that BT is going to make bid for Infostrada. The article below would indicate that BT is in over their heads at the moment and really does'nt have the horse power in the short-term to get a deal done. Hopefully, the "asset exchange" mentioned below will allow VOD to pick-up BT's interest in AirTel on the cheap-since it would seem that VOD has the leverage. The street would love to see this IMO and could be an additional nice catalyst for VOD in the short-term.
Thursday August 31, 8:00 pm Eastern Time
BT halts big deals as attacks debt - FT
LONDON, Sept 1 (Reuters) - British Telecommunications has put a brake on big deals as it attempts to reduce its debt mountain by at least 10 billion pounds ($14.56 billion) through disposals and spin-offs, the Financial Times reported on Friday.
The newspaper said BT's Finance Director Robert Brace had set himself a target of raising 10 billion pounds by the end of next year and ruled out any large takeovers or mergers until the recent spending on third-generation mobile networks is digested.
As part of fund raising efforts, the option of floating 20 percent of BT's mobile phone arm is firmly back on the agenda, a move analysts believe could raise 7-10 billion pounds, the newspaper said.
``The debt needs to be managed,'' Brace was quoted in the newspaper as saying. ``If we want to do any deals over and above (those already announced) we would have to sell more assets, unless we can do a deal by swapping assets''.
As a result, rumoured bids for Finland's Sonera and Italy's Infostrada (quote from Yahoo! UK & Ireland: VOD.L) look unlikely in the short term. However, the company will continue consolidating existing businesses, such as its deal on Thursday to increase its stake in Sweden's Telenordia, the newspaper said.
Among likely disposals, stakes in Internet ventures such as Excite UK and LineOne would raise several hundred million pounds, the newspaper said.
Meanwhile, the possible flotation of yellow pages division, Yell, would raise one billion pounds and the sale of a 17.5 percent stake in Spain's Airtel could reap three billion pounds.
If these efforts fail, the newspaper said the only alternative seemed to be a full merger or sale to a foreign group such as AT&T (NYSE:T - news), its existing U.S. partner, or Spain's Telefonica .
``I don't think the default option is to go and do a big deal and throw smoke over everything. To do a merger takes a long time and it can be very costly if the deal doesn't go through,'' Brace was quoted as saying.
BT's debts are forecast to reach 30 billion pounds by next March following the group's purchase of a further stake in German operator Viag Interkom and a third-generation mobile licence in Germany.
Rating agency Standard & Poor's downgraded BT's credit worthiness by four notches earlier this month because of its rising debt and warned it may cut it again if BT delays selling assets |
