A week after announcing plans to eliminate as much as $14 billion in debt, British Telecommunications plc said it was selling its 34-percent stake in Swiss joint venture Sunrise to TeleDanmark, a partner in the deal, for $659 million. BT said the sale netted the company a profit of $560.4 million on the $100.6 million it invested in Sunrise in 1997.
While BT said it plans to remain in Switzerland through its Ignite subsidiary, the TeleDanmark deal was too good to pass up.
“We had an opportunity to sell our stake at an attractive price, at a time when we want to consolidate our operations and focus on the high-growth business market in Switzerland,” BT said in a statement. “This is a case of the right deal at the right time.”
BT previously has stated that its preferred route to 3G is through businesses with existing 2G operations. Sunrise was not awarded a 2G license in Switzerland’s 1998 “beauty contest” for spectrum.
Analysts were not so sure of BT’s motives for selling, noting the telecom giant looked like a forced seller due to its accumulating debt from recent auctions for third-generation licenses.
The announcement came just minutes before the venture was to participate in Switzerland’s auction for 3G mobile-phone licenses. In conjunction with the sale, TeleDanmark said it was merging Sunrise with Swiss telecom company diAx, another bidder in the auction.
The quick turn of events prompted the Swiss government to postpone the auction and begin an investigation into whether any unlawful agreements were made between BT, TeleDanmark and diAx.
BT denied the deal was unlawful in any way or that it broke any auction rules.
BT also is reported to be seeking in excess of $714 million in damages from France’s Vivendi after being shut out of Vivendi’s Vizzavi Internet alliance with BT rival Vodafone Group plc. BT claimed that the exclusion from the Vizzavi alliance breached a deal between BT and Vivendi through their partnership in French telecom operator Cegetel.
While a French arbitration court rejected BT’s claim to close down Vizzavi in France, the court favored BT in a number of additional rulings.
“These points mean that BT is allowed to claim substantial damages not only for the breaches committed by Vivendi and the other respondents, but also for any assets taken out of Cegetel for the benefit of Vivendi in violation of the shareholders’ agreement,” BT said in a statement.
