Bt, Viag Team Up With Norway Firm

British Telecom Plc and its German partner utility Viag AG, said yesterday Norways dominant phone company group Telenor would take a 10 per cent stake in their joint telecommunications activities.

The announcement comes just two days after Viag and British Telecom were awarded the German governments fourth digital mobile phone licence, which will serve as the cornerstone of their plans to challenge incumbent monopoly Deutsche Telekom AG.

The companies plan to combine wireless and fixed-wire networks to create `metropolitan networks in eight German cities by the middle of next year.

Viag Interkom will be the first major telecommunications company to exploit the convergence between fixed and mobile services, said British Telecom global operations director Alfred Mockett.

 

Viag chairman Georg Obermeier said the Telenor involvement was subject to final approval by each of the companies and regulatory officials.

Until the final approval is granted, Telenors stake in the joint company to be called Viag Interkom from April 1, 1997 would be held by a trustee.

Telenor is no stranger to us or British Telecom, said Obermaier. Telenor and Viag built a test DCS 1800 standard digital cellular phone network in Austria and that it was also a cooperating partner of British Telecom and MCIs Concert alliance.

The state-owned Norwegian operator had 1995 revenues of around 4.5 billion marks ($2.7 billion) and with one million subscribers commands 80 per cent of the Norwegian mobile phone market.

Norway is today the most developed mobile market in the world, said Telenor International chairman Terje Thon. The penetration of mobile telephones is close to 30 per cent. With 5.6 million mobile phone users, Germany by comparison has market penetration of mobile telephony of just six per cent Our experiences show that after reaching a critical mass of approximately 10 per cent, the number of subscribers will develop more rapidly, said Thon. Obermeier said Viag Interkom would continue to look for a fourth partner who could bring marketing know-how crucial to building a mass market for mobile phone services.

Talks are taking place but there is nothing to announce yet, he said. In principle, we are talking about another investment of up to 10 per cent.

The companies gave no indication of how British Telecom and Viag would split the remaining 80 per cent stake in Viag Interkom. Viag Interkom has about 659 customers, including German companies such as media group Bertelsmann AG, Compaq Computer, Deutsche Lufthansa, and software group SAP AG, and generated sales of 123 million marks last year, higher than expected.

Obermaier repeated forecasts that Viag Interkom would achieve up to 8 per cent market share in the German telecoms sector in 10 years and more than 20 percent of the mobile phone market.

It would invest 7 billion marks in the next 10 years and by 2007 should generate 10-11 billion marks in sales and break even by 2002. It expects to create 9,000 jobs during this period.