Bidder for BT local loop to meet Oftel
By Reuters staff
02 August 2001
Earthlease, a group of financiers offering eight billion pounds for part of British Telecommunications Plc's fixed-line network, is meeting industry regulator Oftel Thursday to explain why it wants to pursue its bid, despite an initial rebuff from the company, an industry source said Wednesday.
The consortium, headed by U.S. finance house Babcock & Brown, will show Oftel the documents it sent BT in May offering to buy the company's "local loop," the wires linking local exchanges to homes and offices, the source said.
BT has dismissed the bid as absurd, according to one source close to the company, but another said Wednesday it had not closed the door to further talks with Earthlease. Earthlease has said it hopes to resume discussions with BT.
The consortium, which includes U.S. merchant bank Chancery Lane Capital, is offering to invest 500 million pounds a year, for seven to 10 years, upgrading BT's network for broadband Internet services, according to a source who has seen its plans. The bid is backed by financing from JP Morgan Chase, Deutsche Bank and UBS Warburg.
Earthlease would lease access to the local loop to BT and other telecoms companies, making BT a customer-facing services company independent of a the "last mile" of Britain's telecoms network. The offer would allow BT to further cut its debt and would accelerate competition over the local loop, which Oftel has been trying to encourage to speed up the roll-out of high-speed Internet services.
Although BT has said a demerger of the local loop is not on its agenda, Earthlease is not backing down. One of its team, Heather Rabbatts, former chief executive of Lambeth Council, has been planning to make further contact with BT Chairman Sir Christopher Bland since news of the offer became public Sunday. Bland knows Rabbatts from the British Broadcasting Corp., where he is chairman and she is a board governor.
The Chancery Lane person working on the deal, Ted Ammon, has flown from the United States to London to discuss the next move. One option is to give BT a cooling off period while it deals with the demerger of its mobile telephones business, slated for late this year, before Earthlease makes a fresh approach.
An Oftel spokesman said the regulator would support anything that improved transparency in regulation, but would have little say in whether BT could sell its local loop. If BT agreed to a deal, Oftel would have to decide how it split regulation between BT and the buyer of the local loop, the spokesman said. |
