British Telecom has won approval from the European Commission to buy Telenor's 49.5 per cent share of Esat Digifone.

"The Commission's investigation has shown that the deal does not raise any competition concerns, given that the operation would not lead to any creation or strengthening of a dominant position," the EU's anti-trust watchdog said announcing approval of the deal.

BT said last month it had gained full control of Esat Digifone after buying Telenor's stake for $1.24 billion (#1.38 billion). The deal gave BT its fourth major fully owned wireless business. It controls stakes in mobile operators in the UK, the Netherlands, Germany and now the Republic. Meanwhile BT has been warned that its credit ratings may be downgraded should it decide to prioritise shareholder value rather than selling assets at knock-down prices.

The Financial Times reported yesterday that BT was preparing to allow its rating to slide from the mid-investment grade single-A category rather than damage shareholder value by selling assets at low prices as a way to slash its debt.

The company, which sold almost $20 billion of new bonds in major debt sales at the turn of the year, had promised investors it would maintain its singleA rating. But poor equity market sentiment has undermined plans to reduce its £30 billion sterling (#47.5 billion) debt burden by one third via asset sales and disposals.

BT had planned to float its mobile unit, BT Wireless, which takes in Esat Digifone, in the second half of the year to meet debt reduction targets agreed with the rating agencies last year. But the disappointing flotation last month of France Telecom's mobile subsidiary Orange has cast doubt on this strategy.