BT Moves To Acquire Infonet To Beef Up Networking

BT Group PLC will acquire California-based Infonet Services Corp. for $965 million in a cash transaction that will beef up BT's international data-networking business.

Announced Monday, the acquisition will give BT increased access to data-networking services in 180 companies and provide the U.K-based firm with a solid foothold in U.S. markets.

"This is another milestone in BT's transformation into a leading global provider of IT and networking services," said BT chief executive Ben Verwaayan in a statement. "It is our goal to be the first choice for multi-site organizations around the world as they address their increasingly complex communications needs."

Although Infonet has not been profitable, its investors have definitely been of the Blue Chip variety, including KDDI Corp. of Japan, KPN NV of the Netherlands, Telstra Corp. of Australia, TeliaSonera AB of Finland, Swisscom AG of Switzerland, and Royal KPN NV of the Netherlands. The last three have agreed to sell their stakes in Infonet to BT. Infonet has been targeting profitability for 2006.

"Our combination with BT will improve our ability to supply mission-critical services to our customers, by bringing a commitment to the long-term development of IP-based services backed by financial strength and true global scale," said Infonet CEO Jose Collazo in a statement. "While continuing to take advantage of our existing services and delivery platform, our customers will also be able to access the whole breadth of BT's product and solutions capabilities."BT, the largest supplier of telephone landlines in Britain, has been losing subscribers to cell-phone and Internet-phone providers, as have most landline providers everywhere. Its earlier major attempt to enter U.S. telephony markets--its Concert joint effort with AT&T--was unsuccessful and BT pulled out.