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EDITIONS
Wednesday, 7 August, 2002, 12:10 GMT 13:10 UK
Italian mobile operator carved up
Mobile phones
Blu's failure to win a licence hit BT's share price
Telecom Italia Mobile has said it plans to pay 18m euros ($17m; 11m) for the capital and remaining assets of Blu, sealing the demise of Italy's fourth biggest mobile phone operator.

Blu, controlled by the UK's BT Group and the Benetton family's Edizione Holding, tumbled into crisis in 2000 after a shareholder dispute resulted in it failing to win a third-generation mobile phone licence.

It was effectively up for sale from this time, but a deal had foundered on whether European authorities would allow the company to be split up, as shareholders wanted, or demand a sale in one piece.

Earlier this week, the European Commission gave the go-ahead for a carving up of Blu's assets.

Brand survives

Previous agreements to sell assets to Italy's other mobile phone operators will also now be able to proceed.

Telecom Italia Mobile said plans were for:

  • Telecom Italia Mobile to take on Blu's remaining capital, 830 transmission sites, 1,400 radio base stations, a call centre and 700 Blu employees
  • Vodafone-controlled Omnitel to buy Blu's branch network and some of its radio bases
  • H3G, controlled by Hong Kong-based Hutchison Whampoa, to take some of Blu's internet operations
  • and Wind, a venture of Orange, to buy the customer base, the Blu brand and part of the mobile network.

It said the break-up of Blu would be complete by the end of August.

Disillusionment

The disappearance of Blu as an operator draws a veil over an embarrassing episode for both BT and the Italian government.

BT had been pressed by fellow shareholders to increase its stake in Blu and drive the company's strategy for next generation telecoms.

But the UK group balked at the sums demanded, having already paid out billions of dollars for new licences in the UK and Germany, and seen its debts soar.

Investors drove down BT's share price, unhappy at what they saw as slow action in dealing with debt.

Their disillusionment was compounded by Blu's failure to win a new licence - something some saw as signalling a lack of coherent strategy at BT for the next wave of telecoms expansion in Europe.

The licence sale also proved painful for the Italian government, which had expected to raise $25bn but ended up with less than half that.

It later lost a legal case against Blu, in which it had sought the return of a $1.7bn deposit.

See also:

06 Aug 02 | Business
24 Oct 00 | Business
24 Jan 01 | Business
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