BT reportedly gets another wireline offer

A German-led consortium reportedly has increased the stakes in the emerging and apparently unsolicited bidding war for British Telecommunications wireline assets.

According to a report in The New York Times, a group led by German bank Westdeutsche Landesbank Girozentrale of Dusseldorf (WestLB) has offered about $25.7 billion for BT’s entire wireline network.

This bid follows reports of an $11.4 billion offer from financial services firm Babcock & Brown for BT’s local-loop assets alone.

The offers for BT’s networks reportedly include the provision that, after sale, BT will continue offering local service by leasing network access and lines back from the buyer.

While sale offers may be attractive in the short term, ownership of infrastructure is key to BT’s future, said Camille Mendler, director of the European fixed telecoms practice for The Yankee Group.

According to Mendler, the business case for a resale arrangement would “depend on what price they get [for the sale] and what price they would lease back from them…It’s very difficult to break even,” when reselling another company’s lines.

The choice, then, facing BT is a simple one, she said: “Are BT’s investors going to go with long-term logic or short-term cash?”