Market sceptical on BT bid for Colt

Excitement entered the moribund sector of Europe's new carriers yesterday with rumors that BT Group Plc is plotting a bid for Colt Telecom Group Plc, a move that supposedly had the backing of Colt's major shareholder New York investment bank Fidelity. Newspaper reports suggested that BT would bid around 1bn ($1.46bn) for Colt, a modest premium on the current market valuation of 768.7m pounds ($1.1bn).

Though an all-share offer may well tempt Colt shareholders and avoid adding to BT's debt burden, BT chief executive Ben Verwaayen recently dismissed talk that the company would bid for troubled Energis Plc, saying it was unlikely to be aligned with merger and acquisition rumors. The market was unconvinced by the speculation and the shares rose 6.25% to 51 pence.

The logic of a bid for Colt would be to beef up BT's loss-making Ignite enterprise arm and while takeover talk may currently be premature, eventually the survivors of the shake-out in the sector will be forced to get together.

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