Investors press BT on £8bn loop bid. Mike how much MONI is behind such deal? Since BT has a swicth plant of former GPT, Marconi may well be behind such deal.
Investors press BT on £8bn loop bid
By Simon Targett and Dan Roberts in London
Published: July 31 2001 20:54GMT | Last Updated: July 31 2001 21:40GMT
Two of British Telecom's top 10 shareholders are to urge it to rethink its rejection of a £8bn ($11.4bn) bid for its local telephone network by Earth Lease, a consortium of private equity investors.
BT dismissed the bid this week, saying that it stood little chance of success. Under the consortium's proposal, BT's telephone lines, connecting local exchanges to most of the UK's residential and business phone users, would be bought, and then leased back to the telecoms company.
But leading shareholders, who were prominent supporters of BT's £6bn rights issue, believe the deal could have a twin benefit: offloading a non-core business and cutting the remaining debt by more than half.
One shareholder, with a stake of more than 2 per cent, said: "There are good arguments for BT detaching itself from this local business; the return [on the capital] is virtually nothing."
Figures, provided by BT to Oftel, the industry watchdog, suggest the local network of 28.9m lines is run at break-even level, even though the capital employed amounts to about £8.4bn, roughly the sum offered by Earth Lease.
There were questions over the price offered by Earth Lease. But shareholders said this should be the subject of negotiation.
BT said it was happy to listen to the views of shareholders but insisted there were no immediate plans to change its view of the deal. It said the original proposal, which it received from Earth Lease in May, was just too vague to be worth considering. It does not believe the concept is an attractive one for BT shareholders.
On Tuesday night Earth Lease said it was ready to outline its proposals to any BT shareholders who wished to find out more details, but insisted it had not yet made contact with any investors.
Instead the consortium is believed to be examining ways to increase political pressure on BT to re-examine the proposal in the interests of stimulating demand for broadband services. |
