BT clears key hurdle on Indian expansion

BT moved a step closer to achieving its ambitions in India yesterday after the Indian Government issued letters of intent for the award of licences allowing it to offer national and international long-distance services.

It means the group has cleared a key hurdle in its attempt to push its full product range in the country.

But the shares fell amid continued concerns over the company's pension black hole. Earlier this month, the company revealed this had increased to £3.4bn by the end of 2005 after a triennial review of the scheme.

Goldman Sachs reiterated its "sell" recommendation on the shares yesterday after a detailed review of the pension situation, and BT's plans to pay £280m a year for 10 years to plug the gap. The group will initially have to pay £840m up front to cover the first three years. The stock fell 5p to 306.5p.

When the licences are in place, BT will no longer have to rely on a local partner to provide services to corporate customers in India. It will instead be able to offer them through the joint venture BT Telecom India.

BT has set a target of generating $250m (£127m) of revenues from the country - where the majority of its 15,000 Asian staff are based - by 2009 and plans to hire an extra 6,000 staff over the next two years.

Andy Green, the chief executive of BT Global Services, said: "This is an extremely positive step forward. These licences will enable us to roll out our full product range in India and, for the first time, to provide services directly to our customers."

BT's joint venture is with Jubilant Engpro. The UK company holds the maximum 74 per cent stake allowable under Indian law.