BT will take full control of Albacom, one of Italy's first alternative telecommunications operators, by buying out its three partners in a deal worth at least €116m (£80m).
BT will acquire the 74% of Albacom that it does not already own from Ente Nazionale Idrocarburi (ENI), Italy's main energy holding company; Mediaset, the media arm of Italian Prime Minister Silvio Berlusconi's Fininvest Group conglomerate and Banca Nazionale del Lavoro (BNL).
Albacom was established in 1995, just after deregulation of the Italian telecommunications market, and focuses on business communications.
Italian customers and international businesses with operations in Italy stand to benefit once Albacom is integrated with BT, according to BT spokesman Alan Ball.
The acquisition of Albacom, which is subject to standard regulatory approvals, is part of BT's effort to strengthen its position as a global provider of IT and networking services, and is an important step in establishing a pan-European presence, Ball said.
"Italy is the fourth-largest telecommunications market in Europe, and Albacom increases our European foothold in terms of both depth of reach and our services portfolio," Ball said.
Last month, BT announced its plans to buy US-based Infonet Services for $965m. BT said the integration of Infonet will bring more value-added services to the company such as network security and multimedia, along with core IP-VPN (Internet Protocol virtual private network) and ATM (Asynchronous Transfer Mode) network services.
According to Ball, the Albacom deal fits well with its Infonet purchase. "This deal is perfectly consistent with what we are trying to do with Infonet," he said.
"There will be overlaps in terms of networks and services with both Infonet and Albacom, but we are very confident we will be able to resolve those issues."
BT is also converting its entire network to an IP-based, next-generation network, a costly and involved undertaking the company has named the 21st Century Network (21CN) project. As part of that project it announced plans to migrate its UK call centres to a new VoIP (voice over Internet Protocol) system.
Ball pointed out that Albacom already has services that fit well with the 21CN project. For example, last month Albacom launched it own VoIP service targeted at small and medium-sized businesses, which BT now intends to extend to large corporations as well, he said.
As part of the Albacom deal, BT will manage a substantial part of the communications services requirements for ENI, Mediaset and BNL for at least the next five years. The total annual value of these contracts is expected to be at least €150m, BT said.
Of the amount BT will pay to the Albacom shareholders for control of the company, €55m will be deferred for five years and may be increased if Albacom’s profits in its financial year 2008-2009 exceed certain target levels.
That potential increase to the €116m price tag has a ceiling, and is not to exceed four times that year's earnings before interest, taxes, depreciation and amortisation (EBITDA), including debt.
The Albacom deal is expected to be completed by next month.
Laura Rohde writes for IDG News Service