BT set to re-enter US market

• BT to buy control of US operator Infonet
• Acquisition will cost around USD1 billion
• Move will give BT a strong footing in the US market

UK-based telecoms giant BT Group is currently in the process of completing a USD1 billion (GBP550 million) acquisition of California-based communications network capacity supplier Infonet Services, a move which would give it a long-awaited presence in the US market. The UK telco has been looking to regain a footing in the US for several years now; its first attempt to enter the market was through a stake in WorldCom (MCI), but this was aborted, and in 2001 it entered the market via a joint venture with AT&T – Concert - but this failed to meet sales targets and was dismantled later that year.

BT said it expects the transaction to be finalised in the first half of 2005. It hopes that the deal will give it access to high-scale customers such as food maker Nestlé and PC manufacturer Hewlett-Packard. Infonet’s data network spans around 180 countries worldwide and BT claims it will help it to boost services such as VoIP and network security in the face of falling revenues at its basic voice calls business.

Infonet’s current shareholders include telcos Swisscom, Royal KPN, Telefónica, Telstra Corp, TeliaSonera and KDDI Corp. They first expressed an interest in selling their holdings in March 2001, following which Infonet hired investment bankers at UBS and Merrill Lynch to weigh up a possible sale. At the end of fiscal 2003/04 the company reported a net loss of USD66.6 million, while sales fell by 4.9% to USD622.4 million.

Source: PriMetrica's GlobalComms Database