BT compelled to put Britain first

Don Cruickshank, the telecoms industry regulator, moved yesterday to protect the interests of British Telecom's domestic customers should it go ahead with its $20bn merger with MCI, the long-distance US telephone operator.

The director general of Oftel is proposing to insert a new condition into BT's licence which would prevent it from doing anything that might jeopardise its ability to operate and finance its UK telecoms business.

Under the licence amendment BT would have to submit an annual statement confirming it was abiding by the condition while Mr Cruickshank would have the power to order an auditor's report to check that BT was fulfilling its obligations.

BT said it was disappointed at the move. "We don't think it is necessary and most UK operators who have submitted evidence to Oftel agreed with us," said a spokeswoman. She added that BT invested pounds 3bn a year in the UK and had no intention of neglecting it as most of its customers and profits came from the UK.

However, Mr Cruickshank said: "I have a duty to make sure that, as BT expands its interests abroad, it can continue to fulfil its obligations to customers and other telecom operators in the UK."

Oftel issued a consultative document in March setting out powers that it might need to take to ensure that BT continued to look after the interests of its domestic customers properly as it expanded abroad.

News of Oftel's move came as BT announced changes in the ownership of its its Italian joint venture telecoms company Albacom. ENI, the Italian oil and gas company, will pay pounds 58.5m for a 35 per cent stake, reducing the joint holding of BT and the Italian bank BNL to 45.5 per cent.