BT in 3G roll-out deal

June 12, 2001
Web posted at: 1049 GMT

LONDON (CNN) -- British Telecom and Deutsche Telekom said on Tuesday they would jointly roll out third-generation mobile phone networks to cut cost.

Both companies, under pressure to reduce their debts, said they expect cost savings of up to 30 percent over the next 10 months as they share networks in Germany and the U.K.

BT "expects to save about £1.3 billion ($1.7 billion)," Mike Bartlett, a BT spokesman told CNN. "We had expected to spend about £10 billion on our networks over 10 years."

Bartlett said the company was "confident" it was not breaching the terms of its licences to operate third-generation (3G) services in Britain and Germany.

UK regulator Oftel said it wanted to see more information on the deal to make sure it would offer choice to consumers and would not hinder competition.

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German telecom regulator, RegTP, said last week it would allow six 3G mobile phone licence holders to share the cost of rolling out high-speed  networks. Mobile phone operators can now share radio base stations and the towers and antennae that sit on top of them.

The German auction to sell six high-speed mobile phone licences, giving the operators the opportunity to offer video and Internet services to handsets, raised 50.5 billion ($43 billion) for the government.

European wireless operators spent more than $100 billion, much of it borrowed, as they acquired the rights to offer faster services.

Now, those same companies are expected to spend as much as 8 billion on building their networks, analysts have estimated.

British Telecom's BT Wireless and Deutsche Telekom's T-Mobile International will share new and existing base stations, masts and antennas in urban areas, BT said.

Both BT and Deutsche have outlined plans to sell assets to cut their debt mountains, as they attempt to win back investor confidence. Deutsche Telekom has debt of about 60 billion.

BT (BT-A) , which earlier this month launched a record £5.9 billion rights issue to help slash a £28-billion debt mountain, sold its Yell business pages unit for $3 billion last month. The company plans to reduce its debt by about £10 billion this year.

The company paid £5.1 billion to acquire a permit in Germany and about £4.5 billion in the UK. The company also spent another $6 billion on increasing its stake in German mobile phone operator Viag Interkom to 90 percent.

BT last month reported year-end losses of £2.9 billion after taking a £3 billion charge against the goodwill of its German outfit Viag.

BT also plans to sell property and is considering the sale of its stake in business services unit, Concert, to joint venture partner AT&T  (T: Research, Estimates).

Shares in Deutsche Telekom rose 1.5 percent to 24.12 in early Frankfurt trade and BT tacked on 1 percent to touch 430 pence in London.

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