As anticipated, British Telecommunications Plc yesterday announced a joint venture with German industrial group Viag AG for a telecommunications network spanning Germany. The new company, to be called Viag InterKom KG will begin operating in April this year, initially offering the international voice and data services of the Concert venture between BT and MCI Communications Corp, followed by domestic services aimed at medium-sized companies. Each party will hold a 37.5% stake in the company, with the remaining 25% to be taken up by other German partners, the current favourites being German banks. Viag is the first potential competitor to Deutsche Telekom AG to join with a major telecommunications player, and aims to combine its sales and marketing knowledge of the German market with British Telecom’s technical skills to capture part of the largest telecommunications market in Europe. Whether that market can sustain three or four major competitors remains to be seen, but the new company has set an ambitious target of being number two once the regulatory framework is clarified after liberalisation in 1998. It will also have access, licence permitting, to 2,500 miles of optical fibre belonging to Viag’s electricity subsidiary Bayernwerk, and will be looking to expand rapidly as soon as the legal obstacles have been cleared. British Telecom chairman Sir Iain Vallance would not be drawn on investment details other than that the venture represents BT’s largest investment in Europe outside the UK, but the new company is thought to be planning to invest more than #500m over the next 10 years. The pace of investment will be directly linked to the pace of liberalisation, which could actually occur before the January 1 1998 deadline. Viag enjoys a good relationship with both the Bavarian and national governments and this could have influenced BT’s choice, with political clout being paramount in Germany, especially in light of recent upheavals in the government over telephone liberalisation. The venture – which has still to be approved by the European Community – will be jointly managed, BT taking the lead on technical and operational matters, leaving the sales and marketing side to Viag, with other partners to be brought in in due course.
