STOCKWATCH: BT slides as Vodafone seals Japan Telecom, China Telecom deals
LONDON (AFX) - British Telecommunications PLC slid in early trading as
dealers called Vodafone Group PLC's double strike in Asia as a "lose-lose"
situation for the UK incumbent carrier.
At 8.49 am, BT shares were down 9 or 1.51 pct at 586, off a low of 580-1/2
and on a volume of 567,000 shares traded.
The company's woes revolve around deals announced by Vodafone this morning
giving it further strength in Japan and access to the burgeoning and much-prized
Chinese market.
On the one hand, Vodafone -- as widely expected -- is buying AT&T Corp's 10
pct economic interest in Japan Telecom, giving the UK mobile giant 25 pct of the
company. Japan Telecom owns 54 pct of J-Phone, the country's third biggest
mobile operator, which like other Japanese carriers is expected to introduce
third generation services at least a year, and probably more, before Europe can
get in on the act.
The experience gained is seen as invaluable in order to work out how to make
money out of 3G to offset the huge debt burden from 3G licence auctions in
Europe.
BT's 20 pct stake, say dealers, is therefore looking more and more like a
candidate for the debt reduction programme on which BT is engaged, trying to
reduce an estimated 30 bln stg of debt to avoid ratings agency downgrades and
further stockholder ire.
BT management is known to be adamant that getting out of Japan is not an
option. But one dealer described BTs JT stake as "no longer a strategic stake,
just a minority one."
Also troubling for BT is Vodafone's newly minted alliance with China Mobile
(Hong Kong), making Vodafone the preferred partner for the second biggest
operator in mainland China.
With severe limitations on foreign carriers' access to China -- although
infrastructure vendors are much less restricted -- Vodafone's move pushes BT
further down the pecking order in Asia, dealers said. jsj/rn |
