UK looks east as phone frenzy grips Continent
Sunday 25 April 1999
If the deal received regulatory approval, it would produce Europe's largest telecoms operator with a market capitalisation of $170bn - twice the size of BT and dwarfing its market share.
But BT has remained undaunted; the former UK monopoly has been busy focusing on its own expansion into Asia, with the purchase of a stake in Japan Telecom, along with its partner AT&T.
"What is happening around the world can be likened to a dance floor, with everyone looking for partners," says a spokesman for BT. "We are well-placed with lots of alliances. Consolidation will continue and we will continue to do our thing."
There may well be grounds for BT's apparent lack of concern. Rather than the marriage of two operators focused on increasing market share and cutting distribution costs, both Deutsche Telekom and Telecom Italia are losing custom to nimbler upstarts in their home markets. Neither has made inroads abroad or attacked their overmanned bureaucracies. Both need the merger to take the pressure off at home: Deutsche Telekom has lost a third of its long-distance business to rivals and is desperate to expand internationally, while Telecom Italia is keen to escape a hostile bid from Olivetti.
BT is also aware that it is by no means a done deal. The Italian government seems to be regarding it with lukewarm enthusiasm, because the German finance ministry has failed to make a commitment to sell its remaining 72 per cent stake in Deutsche Telekom.
European Commission insiders say there are two areas of concern; one is competition in the fixed-telephone network in Italy, the other is the mobile phone market in Austria, in which both companies have a sizeable stake. But some analysts argue that Competition Commissioner Karel van Miert should not interfere.
"There is no real reason why the EU should get involved," says Peter Roe, telecoms analyst at Paribas. "Because it is not really going to affect the competitive market in either Italy or Germany; it is not as if these two companies are active in the same market." Mr Roe said the only problem emerges with Deutsche Telekom's long-standing alliance with its French equivalent which, were the German/Italian deal to go through, would begin to look like a Continental monopoly.
Since deregulation of the European telecoms sector began early last year, consolidation has been rapid. Only a handful of communications companies are likely to survive. BT intends to be one of them.
Its strategy is worldwide. Over the past year it has focused on the Asia/Pacific region. As well as the Japanese invest-ment with AT&T, it has ploughed more than pounds 630m into joint ventures in Hong Kong, Korea, Singapore, Malaysia and India.
"By piecemeal acquisition in Europe and Asia, BT is building a global business," said Mr Roe.
BT has already achieved a presence in most European countries, while its $10bn global venture with AT&T, the US giant, has restored credibility with international clients.
Chief executive Peter Bonfield has overseen international expansion while continuing to dominate the UK residential market with 80 per cent of all customers.
Whether the Deutsche Telekom/Telecom Italia deal goes through or not in this aggressive market, further consolidation is inevitable.
"This deal would have been unthinkable six months ago," says Mr Roe. "But it should now be looked on as the first stage, with future mergers forcing the efficiency of telecoms companies worldwide."
- 1 Man who was struck and killed by lightning in Brecon Beacons 'was carrying a selfie stick'
- 3 Tube strike: This pedestrian-friendly map tells you the time it takes to walk between stations
- 4 Pamplona Running of the Bulls 2015: Three men gored and 10 hospitalised on first day of festival
- 5 Sarah Jessica Parker explains why she is not a feminist: 'It's not just about women now'
Man who was struck and killed by lightning in Brecon Beacons 'was carrying a selfie stick'
Greece debt crisis: Greek future in the euro slips into deeper uncertainty as Alexis Tsipras arrives at emergency talks without a written plan
Man soars over Calgary after tying 110 balloons filled with helium to his lawn chair for PR stunt, gets arrested for mischief
Tube strike: This pedestrian-friendly map tells you the time it takes to walk between stations
Pamplona Running of the Bulls 2015: Three men gored and 10 hospitalised on first day of festival
More Britons believe that multiculturalism makes the country worse - not better, says poll
Osborne to cap family benefits at £23,000 – announced ahead of his post-election Budget
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Sickness and disability benefits could be reduced by £30 a week as part of £12bn welfare cuts
Greece debt crisis: Angela Merkel and Francois Hollande issue Athens with 24-hour ultimatum to avoid crashing out of the euro
Greece crisis: Referendum exposes a gaping hole at the heart of the European Union – its lack of genuine legitimacy
iJobs Money & Business
£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...
competitive: SThree: Are you passionate about sales?Do you have a keen interes...
£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...