British Telecommunications Plc yesterday confirmed that it has replaced AT&T Corp in the affections of Compagnie Generale des Eaux SA (CI No 3,000), and will invest 1.1bn British pounds and contribute its existing French operations for a 25% stake in the water utility’s Cegetel SA telecommunications affiliate. The move puts it into partnership with one of its German rivals, Mannesmann AG, and with SBC Communications Corp, San Antonio, Texas. The presence of Mannesmann, which was to have been allied with AT&T Corp in Germany, raises question marks over that alliance. The Unisource NV consortium, currently AT&T’s main partner in Europe, will be deeply discomfited by the turn of events – it was to have been Cegetel’s main international partner, and now will have to start again from scratch in France. Generale des Eaux will hold 50% of Cegetel directly and indirectly, SBC 15% and Mannesmann 10%. SBC is investing $300m to raise its stake to 15% from 11%, Mannesmann $600m for its 10%. British Telecom also becomes a member of Generale des Eaux’s cellular alliance, by buying Alcatel Alsthom SA’s 25% of its Cofira affiliate as part of the deal. Generale des Eaux says the cellular operator has captured 40% of the French market, up from 15% in 1995 and has over 700,000 subscribers. British Telecom said its participation in Cegetel was likely to be marginally earnings dilutive in the short-term but is expected to have significant long-term benefits. Cofira holds Generale des Eaux ‘s stake in the Societe Francaise du Radiotelephone SA cellular operating company, in which Vodafone Group Plc is also an investor. Cegetel will apply for a license to offer a full range of telephony services from January 1 1998, and is one of sever al companies talking to French state railway company Societe National des Chemins de Fer, which is proposing to raise $400m for its Telecom Developpement subsidiary, for which financial investors and telecommunications operators are sought as invest ors and partners. The railway has given Lehman Brothers the task of finding a suitable partner. Generale des Eaux and British Telecom are currently discussing the possibility of running the railway’s telecommunications network as partners, Les Echos reported yesterday. AT&T Corp’s only comment on the decision was that after much serious discussion, it was unable to agree with the water company and Unisource BV on a shared vision for delivering services to customers in France. We remain fully committed to France and our strategy of partnerships, it added, and concluded, we will continue to explore opportunities for serving customers in this and other markets throughout Europe.
