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Eurobites: Strange Goings On

Bonjour, mes petites frites, and welcome to the latest update from the land of fromage and art-house films. There's been no shortage of meaningful Euroaction in the past few weeks – and I'm not just talking about the soundbite merchants gathered to pump up each others' egos in Davos.

So without further ado, here's what's hot on the cultural side of the Atlantic.

What Exact-ly is BT Up To?
Here's some news that vendors and investors should find interesting. BT Group plc (NYSE: BT; London: BTA) has revamped the management responsibilities for BT Exact, its R&D, testing, integration, OSS management, and investment outfit.

Until recently, BT's CIO Al-Noor Ramji, who joined last year from Qwest Communications International Inc. (NYSE: Q), ran the Exact show and its 6,000 staff based in the U.K., Malaysia (in the Multimedia Supercorridor), and near the Massachusetts Institute of Technology (MIT) in, er, Massachusetts (see BT Names New OSS Boss).

But now the Research and Venturing (R&V) part of Exact comes under the direct management of the CTO, Matt Bross, while Ramji retains responsibility for the product testing, OSS, and integration services unit (see Why Did BT Bring In Bross?).

R&V develops new applications and software for BT and licenses it to other companies, but if there's a business case for spinning off any development into a separate business, that process is handled by the venture capital arm, NVP Brightstar, a joint investment venture with New Venture Partners LLC, in which BT holds a 23 percent stake.

Companies that have emerged from the stable include software firms Azure Solutions Inc., which indulged in an M&A frenzy last year, and Evolved Networks Ltd., which recently won a large contract with – guess who – BT (see Azure Aquires Anite and BT Picks Evolved).

Equipment vendors will be very familiar with Exact's well-regarded testing labs, which have been putting in overtime as BT works on its network evolution timetable. (See BT Has 21CN Shortlists, Sonus Gets BT Stamp of Approval, BT Exact Tests Juniper's T640, BT Exact Tests Huawei Routers, and BT Exact Creates Service Testbed.)

So what's behind the move? And why has BT, which has cranked up its PR machine during the past year, kept quiet about Bross's new involvement? It's hardly to help fill his time – Bross is the key driver behind the development of the 21CN, a mammoth task that is taking up a lot of resources at the operator as key decisions are made about the lead systems suppliers.

A BT spokesman confirms the management shift but can't supply further details at this point, though he promises to pull together some of BT's big guns to give chapter and verse on the move in the coming days. So watch this space.

The BT news machine has been as busy as usual on other matters recently, though, as it continues to ramp up its outsourcing activities both as a provider of services and as a major customer for Accenture. (See BT Awards BPO Deal to Accenture, BT Wins Thales Contract, BT Wins Landmark US Deal, BT Names Carrier Liaison Officer, and BT Plans SDSL Expansion.)

Meanwhile, the U.K. carrier's international expansion continues unabated. (See EC OKs BT's Buy of Infonet, BT Expands US Presence, BT to Extend M&A Spree, and BT Appoints Asia/Pac Chief.) Never a dull moment with BT.

KPN Stuck in Reverse Gear
What does KPN Telecom NV (NYSE: KPN) know that other carriers don’t?

While nearly every other service provider is tripping over its own cables to secure a position in the emerging East European market, the Dutch carrier appears to be fleeing the region (see Euro Carriers Go Xmas Shopping, EU8 Opportunities, and LR Insider Analyzes Eastern European Telecom Market).

Having sold its stake in central European powerhouse Cesky Telecom a.s. – an operator now the subject of a multicarrier M&A scramble – KPN is now selling its 43.5 percent stake in Euroweb International (Nasdaq: EWEB), which controls ISPs in Hungary, Slovakia, and Romania. It's going to a Croatian outfit for just $8 million (see KPN Sells Euro ISPs).

Although Euroweb isn't a large concern, with minor net losses from annual revenues of between $30 million and $40 million, it does control ISPs in growth markets.

So what are the clog-wearers up to? A spokesman at KPN says the carrier is sticking firmly to its strategy of concentrating on its core markets – the Netherlands, Belgium, and Germany – with scant regard for any temptations that other markets might hold (see Broadband Booms in New EU).

Indeed, he notes that KPN still wants to offload its ISP in Hungary, and once that transaction is complete, KPN will no longer hold any assets in Central or Eastern Europe (see KPN Sells Hungarian Assets). Each to his or her own!

Although news of the sale wasn't announced until this morning, Euroweb's share price soared 14 percent yesterday to $3.50, taking its market value to $18.7 million.

FT Lines Up Job Cuts
France Telecom SA (NYSE: FTE) has laid out its job cut plans for 2005 ahead of its full-year earnings report on February 10.

The carrier, which employs about 200,000 worldwide, is to reduce its workforce by about 8,000 this year through an early retirement scheme. Details, and the costs, will be revealed next week.

The cuts are smaller than in previous years: 2003 saw 13,000 staff face le axe, while another 14,500 received their marching orders in 2004 (see France Telecom Cuts 7% of Staff).

Other recent European news of note:

— Ray Le Maistre, International News Editor, Light Reading

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