British Telecom is to invest up to pounds 600m in a partnership that will try to break the German monopoly of Deutsche Telekom from 1998 onwards.
The venture was strengthened yesterday by the inclusion of the German industrial giant RWE of Essen, alongside Viag of Bavaria, the existing partner.
The move into the German telecoms market, until 1998 a protected monopoly, closely parallels the attack on BT over the last decade by Mercury Communications.
In the UK, competitors such as Mercury have been unable to break the giant company's dominant grip on most of the market. But BT insisted that the German regulatory framework was likely to give it a better chance of a breakthrough to a substantial market share. BT said the three companies would invest roughly equal shares over the next few years of a total of DM3bn-DM4bn (pounds 1.3bn-pounds 1.8bn) planned spending. There are rumours that a fourth partner, the industrial group Thyssen, may also join. If the partners win a further licence for mobile telecommunications services, they may spend a further DM1bn, a BT source said.
Sir Peter Bonfield, BT's chief executive, said the German partnership was a key element of the group's international strategy.
The company, chaired by Sir Iain Vallance, now has partnerships in half a dozen European markets. But Alfred Mockett, managing director of BT's global communications business, admitted that the going was tough in France, where BT is still short of a partner for an attack on France Telecom - which like Deutsche Telekom is due to lose its monopoly from 1998 under a European Union deregulation programme.
Mr Mockett said BT's other joint ventures would allow it to ensure that all the projects produced a "well fitting jigsaw, providing seamless European coverage."
Meanwhile, Don Cruickshank, the telecoms regulator, directed BT to stop unfair cross-subsidies to parts of its Managed Network Services, following his second attempt to investigate complaints.
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