21 January 2002 German banking group WestLB has resurrected its £18 billion (€29.3bn) offer for the fixed line assets of British Telecom (BT).
The investment bank abandoned its attempt to buy BT’s telephone exchange infrastructure three months ago, when BT turned down its offer. The telecoms giant is understood to have been unhappy at what it regarded as the unfavourable terms WestLB had offered to lease back capacity.
However, WestLB has confirmed that new talks are planned with BT’s new CEO, Ben Verwaayen. These will take place within weeks.
Verwaayen, who will officially take up the post of CEO on 1 February, is believed to be conducting a full review of the strategic options available to BT. However, he will only consider offers for the fixed line network business if he has total backing from the BT board. This suggests that WestLB’s offer still has some way to go before it will be approved.
The sale of the fixed line business would help BT slash its debts. During the last year, it has made frantic efforts to reduce this burden, including the lay-off of 13,000 employees from its BT Retail division during 2001 and the sale of minority stakes in various telecoms operators around the world.
But its debts are still high. At the end of September 2001, the figure stood at £16.5 billion (€26.35bn), down from £27.9 billion (€45.3bn) at the end of March 2001.
BT controls about 70% of the fixed-line telephony market in the UK. The company is under growing pressure from shareholders and the City both to reduce its debt still further and to return to fast revenue growth. However, agreeing favourable terms for the sale of its core asset may prove difficult.