I heard recently that BT is to merge with Deutsche Telecom, is this true

asks monkeysay

A. No, it is not true. What is true is that BT and Deutsche Telekom (DT) are to join forces to build their thirdgeneration mobile networks in the UK and Germany. This was announced last month, on 12 June 2001.

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Q. Will this save them money

A. It is believed that the deal could save them -��jointly -��2.5 billion (or 4 billion Euros).

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Q. Are they strapped for cash

A. Both telecoms operators are in debt, having spent over �12 billion on high-speed third-generation UMTS licences for Europe's two top mobile markets - and both are under pressure to cut costs. They have also both lost out in the mobile market leadership race to their mutual rival, Vodaphone.

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Q. How much did BT and DT originally budget to build the networks on their own

A. BT has not declared what it originally intended to spend on its 3G infrastructure, but it has said that it will save �1.2 billon (or 2 billion Euros). It is believed that they had allocated an estimated �6 billion (or 10 billion Euros) for the project. DT has said that it had allocated �5 billion (or 9 billion Euros) on the deal. When the deal was announced last month, shares in both BT and DT were buoyed up�by the news.

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Q. What will the deal actually mean in physical terms

A. It basically means that BT and DT will share parts of their network, effectively building one communications mast instead of two in major urban areas. It will also share new and existing base stations, including sites and antennae, and cooperate on roaming. DT has said that it has no plans to share its electronic network components, known as "active" elements, with BT - so the deal excludes radio receivers, transmitters and controllers.

BT has announced that the deal will allow both operators to cover�their desired footprint earlier than required under the terms of the 3G licences. In Germany, BT expects to cover 50 per cent of the population by 2003 - twice the coverage required by law.

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Q. Has the deal been signed I thought such deals had to be reviewed by the Monopolies and Mergers Commission or some similar body

A. The deal is currently in the MoU (memorandum of understanding) stage, and is expected to be finalised during September. BT and DT have both stated that they do not believe the deal will meet any regulatory problems.

In Germany this will probably be the case, as its telecoms regulator, RegTP, recently announced that it would allow the six winners of the German UMTS licences to share some network infrastructures -�in effect relaxing its infrastructure rules.

However in the UK, telecoms regulator Oftel has stated that it needed more information about the cooperation agreement, and wanted to be sure the deal would bring benefits to customers and not hinder competition. The deal will be conditional on clearance from RegTP and Oftel.

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Q. Does DT already have mobile interests in the UK then

A. Yes, it owns One2One. In the UK, the deal will combine masts for One2One with BT Cellnet, and in Germany it will link DT's T-Mobile to BT's subsidiary, Viag InterKom. Both groups said two-thirds of the savings would come from their respective foreign subsidiary. This is the first reciprocal agreement of its kind by two major operators in Europe.

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By Karen Anderson