BT mulls Nordic exit

BT may shake up its three joint ventures

British Telecom is in talks with Norwegian ally Telenor which may lead to them pulling the plug on their three joint ventures.

The talks were revealed in the prospectus for the 2.68 billion euros privatisation of state-owned Telenor.

The BT bill may be large

Cutting the ties with Telenor might involve a series of transactions that could cost BT up to 2.5 billion euros, according to the Wall Street Journal Europe.

Pure speculation

A BT spokesman dismissed the Wall Street Journal Europe story as speculation, but refused to deny it.

"We don't comment on speculation," he told BBC News Online.

However, a Telenor spokesman confirmed that talks were ongoing, although he was unable to divulge any details.

Joint ownership

"We have three joint ventures with BT, in Ireland, in Germany and in Sweden," the Telenor spokesman said.

The companies jointly owned by BT and Telenor are Telenordia, the third largest Swedish landline telephone operator; Esat Digiphone, the Irish mobile telephone operator; and Viag Interkom, the German mobile and landline operator.

One scenario outlined by the newspaper could involve the Norwegian company letting go of its 10% stakes in Viag Interkom and its 49.5% stake in Esat Digiphone, giving BT 100% ownership of both companies.

Available options

Telenor has options to sell both these shareholdings to BT, the Telenor spokesman confirmed.

The Irish option allows the Norwegian company to sell its Esat Digiphone stake for 1.46bn euros or exchange it for 33% of BT-owned Esat Telecom, the Irish landline operator.

If neither option is exercised by 6 December, Telenor will be required to sell the stake to BT for 1.46bn euros.

The German option allows Telenor to sell its stake to BT for 1.61bn euros.

Made in Sweden

In exchange for the above deals, BT could transfer its 50% stake in Telenordia to the Norwegian company.

The Wall Street Journal Europe estimates the cost to Telenor at about 500m euros.

But the price would depend on whether the company won one of the third-generation phone licences due to be awarded soon by the Swedish government.

If a licence was awarded, one option could be to list Telenordia on Stockholm Stock Exchange, said the Telenor spokesman.

Telenor may well want to boost its presence in Sweden, a year after the failed attempt to merge with the Swedish incumbent telecoms company, Telia.

The BT spokesman insisted that BT had "a strong commitment to Telenordia", but he declined to elaborate when asked specifically whether or not BT was pulling out of Scandinavia.