Gee, isn’t that crazy? This is what the greed of governments (and short-sightedness of companies) in the recent auctions of 3G licenses is resulting in. It’s breaking carriers because the revenue that absorbs those licensing costs is decades away — if ever. Carriers like BT in particular were way too overzealous in their bidding and it’s gonna kill them.
Tuesday May 1 8:28 AM ET BT Could Sell Mobile Phone Stakes
By BRUCE STANLEY, AP Business Writer
LONDON (AP) – Hobbled by debts and struggling for direction, British Telecommunications PLC is talking about selling its stakes in Japanese and Spanish mobile phone operators to rival Vodafone Group PLC.
The disclosures came just days after BT, Britain’s largest landline phone company, replaced its chairman of 14 years. Sir Iain Vallance had been widely blamed for BT’s costly acquisitions and plunging stock price.
BT said it was in advanced talks with Vodafone about the possible sale of its 20 percent stakes in Japan Telecom and the Japanese firm’s mobile subsidiary, J-Phone. The proposed sale was related to BT’s strategy to slash its debts, a company spokesman said.
Separately, Vodafone confirmed that it was in talks with BT about the possible acquisition of BT’s stake in Spanish mobile phone operator Airtel Moviles SA.
BT, a former state-owned monopoly, is struggling to repay some 30 billion pounds ($44 billion) in debts it amassed from buying third-generation mobile phone licenses and stakes in several overseas companies.
As BT’s star has faded, Vodafone’s has burned ever brighter. Vodafone has grown into the world’s largest mobile phone business, with footholds in the United States, Europe and Japan. Based on Monday’s closing share price, it had a market capitalization of 138.0 billion pounds ($200 billion).
BT, by comparison, was worth 36.7 billion pounds ($53.2 billion).
Vodafone already owns 25 percent of Japan Telecom, having just bought 10 percent of the company from U.S. heavyweight AT&T Corp. It owns 26 percent of J-Phone.
If a deal were struck, Vodafone’s shareholding in Japan Telecom would increase to 45 percent, and its stake in J-Phone would rise to 46 percent.
BT could generate more than $4 billion from such a deal.
However, a sale would be a clear setback for BT, given that the company only recently negotiated options to buy an additional 5 percent stake in J-Phone.
Together with AT&T, BT invested around $1.7 billion in Japan Telecom in 1989. It bought a stake in J-Phone in October.
Vodafone said its talks with BT about the possible acquisition of BT’s stake in Spain’s Airtel Moviles may or may not lead to an agreement.
Vodafone has a 73 percent stake in Airtel Moviles, while BT holds a 17.8 percent share.
The two announcements helped boosted BT’s share price by 4 percent to 581.5 pence ($8.43) each in midday trading on the London Stock Exchange.
Vodafone shares slipped 2 percent to 207.25 pence ($3.01) each.