BT shells out £520m for Infonet

Global data network tie-up

By Tim Richardson, 8th November 2004

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BT is to buy US-based international data network outfit Infonet in a deal worth £520m ($965m). Once given the regulatory thumbs up and approval by shareholders, the deal is expected to give an almighty boost to BT's Global Services division, which provides ICT services to companies in 136 countries.

Much of BT Global Services work is providing telecoms services for companies within each country it operates. Infonet, on the other hand, provides secure data networks linking companies between countries. With 1,800 multinational corporate customers - including Siemens, Nokia, IBM, Hilton International, DHL and Nestle - the acquisition of Infonet should "significantly increases that element of BT Global Services' business", said BT in a stock exchange announcement.

The deal will give BT global access to some of world's biggest companies, especially in North America and Asia Pacific, giving it the chance to flog them other services, too.

Although the headline deal is £520m, the real cost to BT is £310m ($575m), as Infonet has £210m ($390m) of cash stashed away. The transaction is expected to be closed by summer 2005.

BT Global expects to generate significant cost savings from combining the two businesses, by selling off duplicate networks and the "rationalisation of country operations, back-office and administrative functions".

A spokesman for BT confirmed that job losses were on the cards, although at this stage it is not known how many of the 1,100 people who work for Infonet and the 8,000 who work for BT Global Services might be affected.

Said BT chief exec Ben Verwaayen: "This is another milestone in BT's transformation into a leading global provider of IT and networking services. It is our goal to be the first choice for multi-site organisations around the world as they address their increasingly complex communications needs." ®