BT Gains Full Ownership of Germany's Viag Interkom
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[London, ENGLAND] BT announced Tuesday that it will purchase the remaining 45 percent of German telco Viag Interkom held by utility company E.ON for EUR 7.25 billion (US $6.87 billion).
The purchase, which is being made because E.ON has exercised a put option that was part of a deal signed last August, will give BT complete ownership of the German fixed and mobile operator.
At the end of last year, BT confirmed its purchase of a ten percent stake in Viag Interkom held by Norwegian telecommunications company Telenor. The cost to BT on that occasion was EUR 1.61 billion (US $1.53 billion) -- and the deal will be completed at the end of January.
A spokesman for BT called Viag Interkom "an innovative player in the German telecommunications market," and pointed out that Germany was the largest national communications market in Europe.
"The cost to BT of the put option was fixed last year and has been taken into account in our predicted debt levels for the end of the current financial year," said the spokesman.
BT's debt level continues to be a vexed issue in the markets, with most analysts saying that BT will not recover its share price until it reduces its debt. Even worse, if it fails to meet its existing debt targets it could face ratings downgrades, according to ratings company Standard & Poor's.
At the time of the original deal with Viag Interkom in August, BT's Chief Executive Sir Peter Bonfield said the German company's strength in mobile, Internet and new technology fixed network assets gave it strong positioning in Europe.
"With the recent increase in our ownership to 100 percent in the Dutch operator Telfort, and our position alongside Telenor in Esat in Ireland, together with our other interests, we are clearly demonstrating that Europe is BT's home market," said Bonfield.
Viag Interkom expects to have around 3.5 million subscribers by the end of the year, adding over a million users during 2001. Its Internet business, Interkom Online, has over half a million active customers.
Despite BT's ownership, the culture of Viag Interkom will remain predominantly German. The company is headquartered in Munich.