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The Independent Online

When Nicholas Lethbridge, Jimmy Lee, Ted Ammon and Heather Rabbatts turned up at BT's head office in London's Newgate Street with £8bn cash in hand for the telco's local wires business, the response could have hardly been more shambolic.

"No," said BT chairman Sir Christopher Bland to the quartet known as Earthlease, but he did little to hide his annoyance. He wasn't cross about the offer but because BT had kept him in the dark about an internal study into selling off the wires business. "Spitting with rage" is how one BT insider described the ebullient chairman.

This, of course, is just another day in the life of the accident-prone BT, whose public relations record is only just better than Railtrack's. But it was a good start for Earthlease, which has the backing of a bevy of finance houses that includes Babcock & Brown, Chancery Lane Capital, Deutsche Bank and JP Morgan Chase.

Earthlease isn't going to go away just yet. It never really expected BT to accept the £8bn offer, but it has now laid down its marker. It also, as is revealed in this paper today, hasn't ruled out making a hostile bid for the whole of BT to get its hands on the wires.

Last week's stories about BT shareholders putting pressure on Sir Christopher and his embattled chief executive Sir Peter Bonfield to take the money did wonders for the plucky four's cause. To boost their case they met the telecoms regulator last week and plan to meet ministers and City analysts in the coming weeks. Earthlease also claims to have commitments from three senior figures in the telecoms who are prepared to join the consortium if it wins its bid.

Earthlease is covering all bases and will come back to BT with a revised offer. That's almost a dead cert. But there is a very strong argument for BT to keep saying "no".

BT isn't in such desperate need for money as it was, say, a year ago, when its debt levels were at £30bn. A rights issue and various disposals have kept its head above water. More fundamentally, BT must think very carefully before selling what is, in effect, its soul.

The wires are essential not only in providing new and potentially lucrative high-speed internet services known as ADSL, but to its domestic telephone business, a solid cash generator.

If BT took the wedge of cash then it would become a customer of Earthlease and with it BT would partially lose control over two of its most important businesses.

There is then the question of valuation. The £8bn offer is woefully short of what the wires business is really worth. Earthlease probably knows this, but whether it is prepared to offer £12bn to £14bn, which some analysts have valued the business at, is a different matter.

BT should stand its ground with Earthlease. This may not be the end of the affair, because BT's wires business may attract another suitor, in the shape of Rupert Murdoch.

Mr Murdoch wants to launch interactive television services in the UK through BSkyB, which he part-owns. To do this he needs to sign a deal with a telecoms provider to make his TV services truly interactive.

Mr Murdoch has already applied to the Independent Television Commission to use BT's local wires, but the thought of owning the network outright and, with it, having access to almost every home in the country, my prove just too tempting for the Dirty Digger.