BT set to re-enter US market with $1bn purchase

BT Group is poised for a surprise return to the US market with a planned $1bn acquisition of Infonet Services, a California-based telecoms service provider.

BT Group is poised for a surprise return to the US market with a planned $1bn acquisition of Infonet Services, a California-based telecoms service provider.

The move comes after BT's earlier forays into the US market ended in disaster, and could be announced as early as today, according to industry sources. Infonet, based in El Segundo, California, has a stock market value of about $960m, but BT may have to pay a 30 per cent premium to secure the deal. It would give BT access to blue-chip customers such as Nestlé and Hewlett Packard.

A BT spokesman declined to comment on the deal. The move comes three years after BT scrapped its loss-making Concert joint venture with the US telecoms group AT&T. That resulted in a £1.2bn writedown and in part forced BT to undertake what was then Britain's biggest rights issue to rebuild its balance sheet, raising £5.9bn.

BT had previously also made an abortive bid for the US telecoms group MCI.

Founded in 1970, Infonet provides data services to almost 3,000 multinational companies and to US government departments, including the Pentagon, and the deal would therefore need clearance from the new Bush administration.

Infonet owns a large private telecommunications network that spans more than 180 countries, and provides local service support in over 70 countries. Infonet is owned by a group of telephone companies, comprised of Japan's KDDI, KPN of the Netherlands, Swisscom, Spain's Telefonica, Sweden's TeliaSonera and Australia's Telstra.

The company posted a net loss of $66.6m in the year through March, when sales dropped 5 per cent to $622.4m. But revenue rebounded in the first quarter of the current year, rising 5.7 per cent from a year earlier.

Infonet said in March 2001 that it hired UBS and Merrill Lynch to help evaluate its options, including a possible sale. Its shares have slumped to $2.07, from a peak of $33.69 in March 2000, and an offer price of $26.44 when the company was floated in December 1999.

With the acquisition of Infonet, BT hopes to boost its presence in data services and network security products. BT is due to unveil first-half figures on Thursday.