BT Group Plc will buy Infonet Services Corp for $965 million in cash, giving Britain's top fixed-line telecoms company 1,800 multinational corporate clients and an expanded presence in the United States and Asia. BT said on Monday the purchase of California-based Infonet, with a presence in 3,000 cities across 180 countries, would greatly enhance its ability to service its corporate customers, particularly in the United States.
Infonet is a supplier of communications network capacity to multinational companies and to the US government, and would bring BT a blue chip client list including Swiss food giant Nestle and US computer company Hewlett Packard.
But BT shares and bonds fell on the news on fears the former monopoly may face difficulties making the deal work, especially given its previous track record in the United States. There were also concerns on whether the purchase would reduce the company's return of cash to shareholders.
Shares in the company were 1.7 percent down at 189 pence by 1015 GMT. In the bond market, the cost of insuring against a default by BT rose slightly, with 5-year credit default swaps on rising two basis points to 48 basis points, traders said.