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Telecommunications industry

BT Shares Soar Amid Speculation of Microsoft Deal

Strategic Insights

— 1 min read

Alex Brummer's article, published with a correction on January 26, 1998, highlights the phenomenal rise in BT shares at the beginning of the year, driven by speculation that the company might be exploring talks with Microsoft. As the global telecoms industry undergoes significant changes, BT's competitive position in Europe and its potential partnership with Microsoft make it an attractive target for investors. The article also touches on the implications of a possible alliance between BT and Microsoft, including the need for significant investment in fibre optic technology and the regulatory challenges that such a partnership would pose.

Key Takeaways:

  • BT shares have seen a phenomenal rise since the start of the year, driven by speculation about a potential partnership with Microsoft.
  • The prospect of an alliance between BT and Microsoft would give the US company a foothold in Europe and the opportunity to deliver Internet and wired services to every home in Britain.
  • BT's network is not based on fibre optic technology, which would require a significant investment of £10 billion-£12 billion to upgrade.
  • Mr. Gates would need to consider the regulatory implications of a partnership with BT, including the ban on overseas ownership of more than 20% of the company.
  • A partnership between BT and Microsoft would also have implications for other players in the UK telecoms industry, including the dominance of BT and Microsoft in their respective markets.
  • The regulatory environment in the UK is changing, but BT remains the dominant force in the telecoms industry, and Microsoft is the dominant player in software technology.

Statistics:

  • BT shares have risen since the start of the year.
  • The investment required to upgrade BT's network to fibre optic technology is estimated to be £10 billion-£12 billion.
  • The ban on overseas ownership of more than 20% of BT would need to be addressed in the event of a partnership with Microsoft.
  • The South East Asian economic crisis led to an increase in lower risk bond investments earning only 2% in real terms.

Sources:

  • "The Times" (article and correction)
  • "The City Notebook, Page 20, January 21"

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