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During the 2001 financial
year, BT completed a number of acquisitions of businesses, mainly located
outside the UK. The total amount invested, including further funding of
existing ventures, was £14,501 million.
In April 2000, we took an
equity interest, jointly with Japan Telecom, in a number of regional Japanese
mobile phone companies (J-Phone Communications). Instead of investing directly
in J-Phone Communications, we guaranteed bank loans to that group totalling
£782 million at 31 March 2001. As noted above, we have now agreed to sell our
interests to Vodafone for £3.7 billion. As part of this transaction, BT will
exercise options to buy just under 5% of the shares in each of the three regional
J-Phone operating companies from Japan Telecom for a total of £380 million.
In June 2000, we acquired
for £1,207 million our partner’s 50% interest in Telfort, the communications
joint venture which we established in The Netherlands in 1997. Goodwill of £986
million arose on the transaction which is being amortised over a 20-year
period.
In the final quarter of the
2001 financial year, we acquired the 55% interest in Viag Interkom that we did
not already own under agreements made in August 2000. In January 2001, we
acquired a 10% interest from Telenor for £1,611 million, including its share of
the German third generation licence and in February 2001, we acquired the
remaining 45% interest from E.ON for £7,148 million, including its share of the
cost of licence. Goodwill of £4,992 million arose on the transactions. In the
light of falling equity valuations for wireless companies in the 2001 financial
year, we have carried out impairment reviews of the carrying values of Viag
Interkom and our other major wireless interests. As discussed above, we have
recognised a £3,000 million goodwill impairment in Viag Interkom. The remaining
goodwill is being amortised over a 20-year period.
Shortly after the end of
the 2001 financial year, in April 2001, we acquired the 49.5% interest in Esat
Digifone that we did not already own, also from Telenor, for £856 million under
an agreement made in early 2000.
During the 2000 financial
year, BT also completed a number of acquisitions of businesses or interests in
ventures. The total amount invested, including deferred considerations and
further funding of existing ventures, was £8,755 million. The investment in the
new Concert global venture, in the form of assets contributed, was additional
to this.
In November 1999, we completed
the acquisition of the 40% minority interest in BT Cellnet held by Securicor.
The total cost of this acquisition was £3,173 million, including legal fees and
other expenses. Goodwill of £2,997 million arose on the transaction which is
being amortised over a 20-year period.
BT acquired jointly with AT&T a 30% interest in Japan Telecom
for £1,254 million in August 1999, with BT having an economic interest
of 20%. Concurrent with this transaction, BT sold its Japanese subsidiary
to Japan Telecom. Goodwill arising on the interest of Japan Telecom
of £432 million is being amortised over a 20-year period. As already
mentioned, Vodafone has acquired AT&T’s interest and,
on completion, our interest in Japan Telecom will be through a simple
20% direct investment in the company pending the sale to Vodafone.
In Canada, BT acquired an effective 9% economic interest in AT&T
Canada. In conjunction with AT&T, we jointly purchased 33% of
Rogers Cantel Mobile Communications, a leading mobile operator,
leaving BT with an effective interest of approximately 17%. The
consideration paid by BT in August 1999 for these two investments
totalled £659 million.
In January 2000, BT and AT&T
announced the financial completion of Concert, the global communications joint
venture. This venture was formed by BT transferring the majority of its
cross-border international network assets, its international traffic, its
business with selected multinational customers, together with Concert
Communications, and AT&T transferring similar assets and businesses. The
provisional unrealised profit on transferring these assets of £159 million was
recognised in BT’s statement of recognised gains and losses in the 2000
financial year. During the 2001 financial year, certain true-up calculations
have been made causing a downward adjustment of £49 million to the unrealised
profit which has been recognised in this year’s statement of recognised gains
and losses.
In August 1999, we
completed the acquisition of the Yellow Book USA classified directory
advertising business based in New York for a total consideration of £415
million. In the same month, we acquired Control Data Systems (renamed Syntegra
(USA)), a US-based e-commerce and systems integration company, for £213
million. In May 1999, we acquired a 20% interest in SmarTone of Hong Kong, a
leading provider of digital mobile communications services, for £241 million.
Under an agreed offer made
in January 2000 and separate transactions with two of its major shareholders,
we acquired control of Esat Telecom Group (Esat) at the end of March 2000,
following regulatory clearance. We paid the majority of the consideration of
£1,558 million in April 2000 after the 2000 financial year end. This Irish
communications group held a 49.5% interest in Esat Digifone, Ireland’s second
largest mobile phone operator. We acquired a further 1% in this company in
January 2000, so it also became part of the BT group at the end of March 2000.
On completion of the fair value exercise goodwill of £1,878 million arose on
the combined transactions which is being amortised over a 20-year period. As
noted above, Telenor was the other shareholder in Esat Digifone, with a 49.5%
interest which we acquired in April 2001.
In the 1999 financial year,
BT acquired from MCI its 24.9% interest in Concert Communications for £607
million. Goodwill of £568 million arose on this transaction. As explained
above, Concert Communications was transferred to the global venture with AT&T in
early January 2000.
In March 1999, the group,
through its then 60%-owned subsidiary BT Cellnet, completed the acquisition of
Martin Dawes Telecommunications Holdings (MDT) (renamed BT Cellnet Lumina),
then the largest independent mobile telecommunication services provider in the
UK. The consideration totalled approximately £130 million, of which £90 million
was deferred. In December 1999, an additional £27 million was paid in acquiring
a minority interest in MDT’s main operating subsidiary. Goodwill of £186
million arose on this combined acquisition and is being amortised over 10 years.
The group invested £1,326
million in the 1999 financial year on acquiring interests in associates and
joint ventures and providing their further funding. The most significant
investments were made in October 1998 in the Asia-Pacific region. A 33.3% stake
in Maxis Communications of Malaysia was acquired for £279 million and a 23.5%
interest in LG Telecom in the Republic of Korea was acquired for £234 million.
BT continued to share in funding the development of its then ventures, Viag
Interkom (£482 million) and Telfort (£103 million). |
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