European network gives BT the edge in telecoms race
Friday 12 June 1998
In a long-awaited update, BT will today for the first time disclose detailed information about its holdings in continental Europe. The figures are expected to show that BT has a more extensive European network than most of its rivals, which include US giants such as WorldCom and AT&T.
BT will show that, just six months after telecom markets in France and Germany were first opened up to competition, its associate companies in those countries have successfully lured hundreds of thousands of customers away from the old state monopolies.
The success of these operators gives BT a large base of corporate customers to which it can sell its international call services. What is more, by using its own networks BT is able to deliver telecom traffic at much cheaper rates than if it had to use the networks owned by established operators.
Over the past few years, BT has been preparing for European telecom deregulation by entering into joint ventures with local operators and joining in the bidding for new mobile telecom licences.
The group now has 12 operating licences in continental Europe, more than any other operator. Although many are held with other utilities and telecom firms, the ability to connect the different operators together effectively gives BT access to a pan-European customer base.
The long-distance networks in each country are designed in the same way, allowing them to be linked together using sophisticated technology. This gives BT a network which stretches across Germany, France, Italy, Switzerland and the Netherlands and allows it take on large US operators in the race to supply sophisticated international telephone and data communications services.
Analysts will be keen to hear about progress at Cegetel, the French fixed and mobile operator in which BT holds a 26 per cent stake. The company, which is building a long-distance network in Northern France, is estimated to have signed up more than 200,000 residential customers since launching the service in February. Meanwhile SFR, the group's mobile service, now boasts more than 2.5 million customers - twice the number it had a year ago.
Chris Godsmark, telecoms analyst at stockbroker Henderson Crosthwaite, estimates that BT's stake in Cegetel is now worth pounds 2.2bn, compared with the pounds 1bn that BT paid for it in September 1996.
Analysts are also expecting more financial detail on BT's European businesses. Robert Brace, the group's finance director, surprised investors last month when he predicted that losses in continental Europe would peak at about pounds 300m this year.
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