BT Moves on Video, Italy

Creates entertainment division to drive video over IP strategy; deflects rumors of Italian expansion

November 29, 2004

3 Min Read
BT Moves on Video, Italy

U.K. incumbent operator BT Group plc (NYSE: BT; London: BTA) has taken its latest step toward triple play, announcing a new business unit devoted to entertainment services (see BT Creates Entertainment Division).

The carrier is already offering some niche (as opposed to "Nietzsche") entertainment and gaming services, as part of the broadband service it has developed with partner Yahoo Inc. (Nasdaq: YHOO), and it is currently testing multiple IP TV, or video-over-IP, systems with a view to trialing such services in the new year (see Broadband CPE Revenue Hits $4.2B and BT Puts IPTV to the Test).

Now it has created BT Entertainment to work with content owners to "develop, license, and bring to market content value added services such as on-demand music, gaming, TV, and movies." BT is already developing a music-distribution platform (see BT to Create Music Content Portal).

The new unit will be part of BT Retail, the division that provides residential and business services in the U.K., and which is currently looking for a new CEO (see BT's Danon Quits for Capgemini). BT has appointed its head of value-added services, Andrew Burke, to run the unit, and it has poached the head of the U.K. division of Universal Studios Networks, Dan Marks, to develop its video-over-broadband services and relationships with major content partners.

A BT spokesman says the carrier will decide in January whether to extend the current tests, which are focused on time-shifted TV services, into customer trials, but no decisions have been made about the potential scale of such services, nor the number of customers that might be involved.

BT has no plans to create any content of its own, Marks says, but the operator is "talking to everyone" about content licensing deals. "We're in discussions with all the big content owners, and we'll talk to anyone interested in a content partnership."

BT isn't talking about other aspects of its expansion, however. With the acquisition of international business service provider Infonet Services Corp. already under its belt, BT is believed to be in talks to buy out its partners in Italian operator Albacom SpA, a business services provider of which BT currently owns 26 percent (see BT Buys Infonet).

The Italian market is currently rife with rumors of consolidation between Telecom Italia SpA's (NYSE: TI) rivals (see e.Biscom: Wind Rumor is Hot Air). Now the local media is speculating that BT is in advanced talks to buy out its Italian partners in a deal worth up to £180 million ($340 million).

Citing sources close to the talks, Italian business newspaper Il Sole 24 Ore said the other shareholders – energy group Eni SpA, BNL SpA (Banca Nazionale del Lavoro), and Mediaset – were keen to sell their stakes to BT.

A BT spokeswoman would neither confirm nor deny the speculation.Telecom Italia, which was recently fined for anti-competitive practices in the business services market (see Eurobites: I Heard a Rumor…), dominates the national market, but other operators believe there is a clear opportunity to compete with the incumbent on service delivery and performance (see Interoute Buys Fiber-to-the-Pope).

— Ray Le Maistre, International News Editor, Light Reading

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