Rail telephone sale next year: National network will be able to compete with BT and Mercury

THE Government plans to privatise British Rail's telecommunications operations by the end of next year. The sell- off will give British Rail Telecommunications the freedom to offer telephone services in competition with BT and Mercury.

The company, which at present may only provide services to BR, will have exclusive access to a modern network that runs into every city and sizeable town in the UK. Potential customers include businesses that want private telephone networks, and local cable companies, which could link into BRT's nationwide wires.

The announcement of the sale comes within weeks of the resignation of Peter Borer, BRT's managing director. Mr Borer is believed to have disagreed with Sir Bob Reid, BR's chairman, over delays in privatisation. New management will be put in place and the company will be restructured by 1 April next year in preparation for the sale.

Potential buyers, which are likely to include large overseas telephone and media companies, will be offered a company with 2,000 employees but few physical assets. The network itself and related equipment will remain in the ownership of Railtrack, the public sector body that will retain the British Rail infrastructure after BR is privatised.

BRT will continue to manage Railtrack's business telephone service and operational communications in addition to using the network to serve other customers.

Ministers have not yet put a value on the telecommunications business. That will depend on the value of the contracts the company negotiates with customers.

Roger Freeman, Minister for Public Transport, said that the contract between Railtrack and BRT was essential to the sale. However, he added that Railtrack would want to 'test the market' again in future and could go to other telecommunications operators.