BT to allow Esat independence

British Telecommunications (BT) would take a "hands off" approach towards Esat Telecom while financing a third generation mobile licence and future acquisitions by the company, according to BT's group director of strategy and development.

Mr Patrick Gallagher, who this week met the Minister for Public Enterprise, Ms O'Rourke, in Dublin, said BT had learned from the mistakes it made in the 1980s and early 1990s when it attempted to "plant the British flag" in Europe.

The company had changed its growth strategy to building local partnerships across Europe, he added. Human capital was a major asset of Esat Telecom and local management would be left to take decisions.

He contended that Esat would benefit from the buying power of BT, global alliances, access to technology and research and development. BT spends £300-£400 million (€487649 million) on R&D every year, he added.

Mr Gallagher said BT would also finance third generation mobile licences by issuing equity and it would invest to assure that Esat Digifone got a licence in the Republic.

He hoped the telecoms regulator in the Republic would not choose a UK style auction to distribute third generation licences. He said he had brought this up with Ms O'Rourke at their meeting.

The high cost of licences in the UK, where BT is paying £4 billion sterling, would slow the roll-out of third generation technology and end up being paid for by customers.

Mr Gallagher denied that BT held a schizophrenic attitude towards unbundling the local loop - enabling competing operators access to its local network - by opposing it in its home market while promoting it abroad.

He said BT had changed its attitude from six months ago when it had argued that it shouldn't be forced to give other telecoms operators access to its network. He said the company now favoured opening the local loop in a "consistent way" across Europe.

However, he said liberalisation in the UK telecoms market had enabled other telecoms operators to hammer BT's market share while BT were paying punitive interconnect rates to use the local loop in countries such as Germany.

Mr Gallagher said the ongoing merger process between Ocean and Esat Telecom was progressing smoothly and was being carried out entirely by local management.