BBC News Online: Business

BT buys German mobile firm

BT is paying the other major shareholder, E.On, 6.65bn euros ($6.04bn, £4bn) for 45% of Viag, to add to the 45% it already owns.

The remaining 10% stake is owned by Norway's Telenor.

Viag Interkom is the smallest of Germany's four mobile-phone network operators, as well as a fixed-line business.

BT's move follows UK rival Vodafone's purchase of Germany's Mannesmann earlier this year.

It is seen as an important purchase for BT as it aims to follow its rival in becoming a pan-European player.

Policy change

The Viag deal appears to have been a break from policy for BT, which to date has acquired mostly a variety of small stakes in - rather than control of - telecoms companies across Europe.

The exceptions are recent investments in small telecoms providers in the Netherlands and Ireland.

BT recently reported that its pre-tax profits for the three months to 30 June fell 27%.

Earlier this year, it failed to clinch a merger with Spain's former phone monopoly Telefonica.

The deal for Viag Interkom brings to 8bn euros the amount BT has paid to get control, less than the amount paid by other phone giants for wireless assets.

Viag Interkom's principal asset is E2, a wireless operator with about two million customers.

It also owns a fixed-line business that provides phone and data services to corporate customers.

BT shares initially rose in London before tumbling 33p to 790p as investors digested both the takeover news and the rising cost of German third generation mobile phone licences.