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Thursday, 2 August, 2001, 20:19 GMT 21:19 UK
BT bidders in talks with watchdogs
British Telecom telephone exchange
BT's 'local loop' is a gateway to millions of homes
Executives bidding 8bn for a key part of British Telecom's line network have met the industry watchdog to discuss their proposals, a report said.

Chiefs at the Earthlease consortium have told telecoms regulator Oftel details of plans to buy BT's so-called "local loop" assets, sources told news agency Reuters.

The local loop assets cover the last mile or so of wire between telephone exchanges and homes.

Earthlease is said to be proposing investment of 500m a year for up to 10 years to develop the equipment, which is key to the expansion of high-speed internet services.

BT said earlier this week its local loop assets, which connect more than 25 million customers to 5,500 exchanges, are not for sale.

But observers are viewing Thursday's meeting as a sign that Earthlease, backed by investment giants JP Morgan Chase, Deutsche Bank and UBS Warburg, is determined to pursue its bid.

"The problem is that nobody knows how much money that [part of BT] makes, so nobody knows if 8bn is [a] good or bad [offer]," a leading BT shareholder said.

Key development

While the offer is thought to have been first presented some months ago, at the height of BT's cash crisis, a rights issue and a series of sell-offs of stakes in foreign telecoms companies have reduced the firm's need for cash.

BT and Oftel nonetheless face pressure from industry, consumers and politicians to promote the take-up of high-speed internet services, a process viewed as key to the spread of e-commerce in Britain.

Oftel, which has forced BT to open up its exchanges to competitors, was last year condemned by the European Commission for the slow development of the high-speed market.

And the EC has opened initial inquiries into whether European telecoms giants have used market dominance to inhibit competition in the market.

EC probe

The EC has contacted new entrants into the market to see whether they have been denied access by incumbent operators to local loop equipment, a right introduced in the EU in January.

"We take the issue of access to the local loop very seriously," said EC spokesman Michael Tscherny.

Dutch data communications network company Versatel, a new entrant into the Belgian market, has already lodged complaints against state operator Belgacom.

"Access to the local loop is not offered under fair conditions or is not offered at all," said Nathalie Brys, Versatel's legal and regulatory affairs advisor.

See also:

30 Jul 01 | Business
BT local loop 'not for sale'
29 Jul 01 | Business
BT faces threat from Virgin
27 Jul 01 | Business
Branson sells French retail chain
26 Jun 01 | Business
BT mulls higher high speed prices
22 Sep 00 | Business
Oftel hits back as criticism mounts
27 Jun 01 | Business
Oftel orders BT to cut prices
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