BT local loop 'not for sale'

BT's 'local loop' is a gateway to millions of homes

British Telecom has said its telephone wires and exchanges are not for sale.

The former state monopoly confirmed it had received an £8bn offer for its so-called "local loop", the last mile or so of wire between telephone exchanges and homes.

A group of financiers, led by the US asset-finance house Babcock & Brown and a New York finance boutique called Chancery Lane Capital, are said to have made their offer in May, at the height of BT's cash crisis.

Since then, the telecom giant has made a £5.9bn rights issue, the biggest in UK corporate history, and sold off non-core assets, in an effort to pay down its £29bn debt mountain.

BT confirmed that it had received an offer for the local loop.

But the telecom giant said the offer was not in the long-term interest of shareholders.

BT's local loop has 5,500 exchanges connecting more than 25 million customers to the BT network.

Under the proposed deal BT would sell the lines to the group and then rent them back.

The new owners would also offer the system to other phone operators or cable companies.

Although viewed by some as an archaic piece of 'old technology', the local loop's value to cable and internet operators is potentially enormous, as it gives a direct line into every household in the country.

Last month the telecom regulator Oftel ordered BT to allow competitors cheaper access to parts of its telecoms infrastructure, including its local exchanges.

The ultimatum was issued after watchdogs admitted to concerns over the slow roll-out of high-speed internet networks in the UK.