BT to woo City over Europe

Telecoms giant seeks to instill confidence after MCI fiasco
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The Independent Online
BRITISH Telecom will launch a campaign to gain City support for its pounds 1bn investment programme in Europe after its aborted attempt to merge with MCI last year left its international investment strategy in tatters.

"We are probably better positioned than any other phone company in Europe. This will be the year when we explain to the marketplace what we expect to get out of Europe," said BT's chief executive Sir Peter Bonfield. "Over the next three to four years there will be some heavy investment where we will be losing money. We have to explain the impact of that on the company's earnings - around pounds 300m a year that will continue for another three years or so."

BT has been forging a myriad of joint ventures with local companies in most European countries in a bid to compete head on with the local national monopolies. These include the purchase of a 26 per cent of stake of French upstart company Cegetel, which BT bought for pounds 1.1bn from its partner in the venture, Compagnie Generale des Eaux. BT claims the mobile phone side of the operation is already profitable. In Germany, the largest market in Europe, BT has allied itself with the industrial group Viag to build a fully integrated fixed/mobile network.

However, analysts have complained that BT has been reluctant to provide details of its investments in Europe. "We haven't a clue what their detailed strategy is in any market," said James Golob, an analyst with Deutsche Morgan Grenfell. "With reasonable large-scale losses, it would be nice to know what they are doing with it all. BT is the most adept company in the market at having meetings and not saying what they are doing."

Ted Graham, head of external communications at BT, denied that the company had deliberately played its cards close to its chest. He said BT would hold a special information session for analysts within the month.

On 20 May it will announce its annual results, with pre-tax profits expected to be between pounds 2.9bn and pounds 3.4bn. Last year BT suffered a major setback when Worldcom, the upstart US phone company, snatched MCI from under BT's nose.