|
BT buys $5B mobile stake
|
 |
July 27, 1999: 5:57 a.m. ET
U.K. telephone giant takes full control of Cellnet mobile unit
|
LONDON (CNNfn) - British Telecom said Tuesday it would pay 3.15 billion pounds ($5 billion) for the 40 percent of cellular operator BT Cellnet it doesn't already own.
BT is buying the stake from its partner, Securicor. Cellnet is Britain's second-largest mobile network.
Securicor's core business is in security services, such as ferrying cash and supplying security guards. The group's shares zoomed 9 percent higher to 594 pence in London Tuesday.
BT stock rose 5 percent to 1,097 pence.
The U.K. government relaxed the rules on BT's Cellnet ownership limit in January. Previous attempts by BT to increase its holding were blocked by regulators who feared the former state-owned group would wield too much power over the U.K. telecom industry.
Analysts welcomed the deal. "The valuation is in line with expectations, but having clear ownership can only can only help management to react to a rapidly changing market," said James Golob of Goldman Sachs. He pointed out that Cellnet had "consistently underperformed" market leader Vodafone AirTouch.
Cellnet has had problems with significant cost overruns and delays in its new billing system. In the 12 months to the end of March its pretax profit slipped to 118 million pounds as it spent heavily to boost market share - now around 30 percent.
Golob said the change of ownership will make it far simpler for BT Cellnet to bid for the next generation of cellular licenses - UMTS - due to be auctioned in the first quarter of 2000
Securicor has been looking for an exit from the business for some time, and BT was the only realistic buyer, given its existing majority stake.
Securicor is passing all the cash on to its shareholders.
|
|
|
|
|
 |
|
