BT is likely to sell its 21% stake in Italian mobile operator Blu.
Italian mobile operator Blu, which failed to win a 3G mobile license in last year’s spectrum auctions, is likely to lose BT as a 21% shareholder soon. The other shareholders, including regional utilities and a motorway operator, accept that BT is unlikely to take control, but do not feel that Blu can survive without backing from a major telecoms firm. They want to sell 51% or more to an international operator.
It’s easy to see why the investors are worried. Further telecoms consolidation is inevitable as debt mounts and revenues from mCommerce and broadband wireless services prove lower than hoped. As a firm without a 3G license, Blu looks particularly vulnerable. While it could follow Sweden’s Telia and partner with another operator, or it could rent capacity and act as an mobile virtual network operator. However, it would be the smallest operator in a six-player market where all the other firms have major international backers.
BT, meanwhile, is suffering from severe debt problems and cannot afford the expansive international strategy of firms such as Vodafone and France Telecom/Orange. Given that it’s never going to take control, it is in the company’s interest to sell its Blu stake. The only problem is who will buy it. The Italian incumbents, controlled by Telecom Italia, Vodafone and France Telecom, are unlikely to be interested in a firm with less mindshare and only a million subscribers. Rather more promising are the newcomers, Hutchison’s Andala and Telefonica’s Ipse. Both could benefit from a subscriber base, an established brand name and some network infrastructure.
Unfortunately for Blu’s shareholders, neither firm is likely to pay over the odds. Hutchison in particular is rumored to be in a fairly tight financial situation following overexpansion in Europe. Telefonica has more cash to spare but still has plenty of debt from its existing expansions. These two look like the most likely buyers, but with a weak stock market the takeover price is unlikely to ease BT’s debt much.
