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July 21, 1991

RED HERRINGS FLY AROUND THREAT TO REFER BRITISH TELECOM TO UK MONOPOLIES BODY

By CBR Staff Writer

According one of those hysterical silly season reports in the Financial Times, government ministers are concerned that the flotation of another 25% of British Telecommunications Plc might now be delayed. The Treasury had been hoping to sell off much of the government’s remaining stake in British Telecom in November. But now Sir Bryan Carsberg, director general of the Office of Telecommunications has disconcerted ministers with his threat to refer the company to the Monopolies & Mergers Commission unless it complies with his new proposals on the access deficit issue. A referral to the Commission could take up to six months to resolve and ministers are worried that sale of the government’s stake will not be able to take place before the next election. Wiser counsels however have pointed out that British Telecom is as keen as is the government to get more of its shares into the market ahead of the election, so that if Labour were to win, it would be a hideously expensive exercise to take the company back into state control – at present it needs to buy only 1.5% of the shares in the market to take 50.1% and control of the company. Moreover, British Telecom will make all the noise its lungs can muster to win the best possible deal from Sir Bryan, but is not likely to face with equanimity the possibility – the likelihood? – that it will end up with a very much worse deal from the Monopolies Commission.

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