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Tuesday, July 27, 1999 Published at 11:05 GMT 12:05 UK

Business: The Company File

BT gobbles up Cellnet

British Telecom has bought Securicor's 40% stake in Cellnet for £3.15bn, making the mobile phone operator its wholly-owned subsidiary.

The money will come out of BT's cash resources.

Cellnet is the UK's second largest mobile telephone operator with over five million customers. Vodafone is the market leader, with Orange and One-2-One the runner-ups.

[ image: BT's Sir Peter Bonfield: an exciting time for the mobile phone industry]
BT's Sir Peter Bonfield: an exciting time for the mobile phone industry
Last year Cellnet made a pre-tax profit of £118m.

BT chief executive Sir Peter Bonfield said: "Following the success of our partnership with Securicor, BT is pleased to have the opportunity to increase its investment in the UK mobile telephony market at this exciting time."

He said the acquisition would leave BT "well-placed to capitalise on the opportunities presented by Second and Third Generation Mobile technology in the highly competitive UK mobile market."

Securicor shareholders can now expect a direct payment, while the deal effectively creates a new Securicor group whose shares will be distributed to the company's existing shareholders.

BT has long wanted to fully own its mobile service, as it has watched rivals grab market share and launch innovative marketing schemes.

But it has previously been inhibited by the fear of regulatory disapproval. In April the government lifted the ban.

It is rebranding the service BT Cellnet, and will offer combined wire telephone and mobile service accounts.

Although Securicor was not able to gain as much as it might have from a sale on the open market, the sale gives the company a massive return on its original investment of just £4m in Cellnet in 1983.

Fast growing industry

The UK mobile phone industry is expanding rapidly, with the introduction of pay-as-you-talk schemes adding customers.

Over 1 million customers acquired mobile phones in the last three months alone, and 17m are now in use in the UK, representing one-quarter of the population.

But Cellnet has lagged behind its rival Vodafone in expanding internationally. Vodafone became the world's biggest mobile phone company when it acquired Airtouch earlier in the year.

The announcement of a new generation of mobile phone licences, which will allow data and Internet transmission, is a crucial stage in the future development of the sector.

The price of mobile calls has also fallen sharply, and continuing investigations by the regulator Oftel is likely to ensure that trend continues.

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