BT Lands Italian Job

BT Group plc (NYSE: BT; London: BTA) executed an Italian double-whammy Tuesday, landing a monster multinational corporation contract worth €450 million ($541 million) over five years and buying a service provider to help it do the job. (See BT Wins Fiat, Buys Atlanet.)

The global services deal is with carmaker Fiat Group, which sounds so much nicer when you call it by its indigenous name, Il Gruppo Fiat. The deal is another of those whopping "we'll do everything except make the coffee" affairs that is helping to drive up BT's so-called "New Wave" revenues. (See 'New Wave' Drives BT, HP, BT Serve Hertz Europe , BT Lands €175M Deal, and BT Gives Global Services Update.)

The acquisition is of Fiat subsidiary Atlanet, which provides telecom services to the automotive giant and other Italian companies. Atlanet has 24 voice points of presence and 42 data POPs around Italy, as well as metropolitan area networks in Rome, Milan, and Turin.

BT is paying Fiat just €80 million ($96 million) for Atlanet, which recorded pre-tax earnings of €12 million ($14.4 million) from revenues of €155 million ($186 million) in 2004.

The carrier clearly sees significant potential growth from Atlanet's customer base, as BT reckons its new addition will contribute €1 billion ($1.2 billion) in revenues during the next five years, so that's €550 million ($661 million) from customers other than Fiat.

The acquisition makes BT a growing force in Italy, where it already has significant operations in the business services market following its acquisition in December 2004 of Albacom. (See M&A Activities Firm Up BT Global, BT Takes Control of Albacom, and BT Goes Global – Again!.)

Ovum Ltd. analyst Richard Mahony is positive about the deal, which "contributes revenues and network reach -- a nice way to grow if you can find the right business to acquire."

In a research note, Mahony cites Atlanet as "a good fit -- it is a cash-neutral acquisition that brings 300 people, and BT intends to increase its profitability through synergy savings of around €20m a year by 2008. We believe these synergies played a significant role in enabling BT to table a competitive bid. Overall, BT Italy has been strengthened through this transaction -- its proposition is deepened through an extended network reach, its order book is bolstered and it has secured perhaps the glitziest account in the Italian enterprise market, which will only add to its local credibility," adds the Ovum man.

— Ray Le Maistre, International News Editor, Light Reading

digits 12/5/2012 | 2:50:31 AM
re: BT Lands Italian Job So BT has landed another major business deal, and acquired a new domestic service provider into the bargain.
Risky strategy? Or right on the button? Looked like a low price for the anticipated growth...
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