BT Gains Full Ownership of Germany’s Viag Interkom

[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.

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