BT and VIAG join forces in Germany.

NEW YORK--(BUSINESS WIRE)--Jan. 10, 1995--BT and German industrial group VIAG today announced that they have reached agreement in principle to form an alliance to offer telecommunications services in Germany, the largest telecommunications market in Europe.

Both parties will have 37.5 percent of the new venture with the remaining 25 percent to be taken up by other German partners.

The alliance, to be known as VIAG InterKom KG, will be headquartered in Munich. It is planning to offer services from April for national and international business customers. These will include international voice and advanced data services currently offered by Concert -- the BT and MCI global network company -- and will be quickly followed by domestic services aimed at medium sized multi-site companies.

This is the first phase of the strategic plan for the alliance company which will seek a licence in Germany to offer a full range of telecommunications services, including public voice.

In line with European Union policy, telecommunication services and infrastructure are set to be fully liberalised in Germany by Jan. 1, 1998.

Investment by the alliance will be several hundred million pounds over 10 years, with a considerable increase should the alliance be given a full licence to provide services. In its first year, the alliance will have 350 employees which will increase to 1,000 in the medium term.

BT Chairman Sir Iain Vallance, said: "We are delighted to have reached this agreement with VIAG. We now view the whole of Europe as our home market and this represents BT's single largest investment there outside the UK. This is a major step in our plans to become a leading alternative to selected incumbent European operators such as Deutsche Telekom."

Dr. Alfred Pfeiffer, chairman of the VIAG Management Board, added: "VIAG now regards telecommunications as becoming an increasingly important part of its activity and we look forward to it becoming a core element of our business. The impending liberalisation of the German market, currently worth about 29 billion pounds and set to grow at six percent annually, offers considerable opportunities."

The new company will have access to BT's wide range of communications technology and have the advantage of BT's 10-year experience operating in one of the world's most competitive environments.

BT has been successfully offering data services throughout Europe for five years. Last summer, through Concert, BT also began to offer combined voice and data services to business customers, providing the only single source of international end-to-end services.

VIAG, one of Germany's largest industrial groups, has in-depth knowledge of the German market. The company is already present in the German telecommunications market through its subsidiary, TB&D, which is set to provide VIAG's corporate network.

The new company will also have access, when regulation permits, to 4,000 km of optical fibre through Bayernwerk, the Bavarian energy company. This is one of Germany's largest private fibre grids.

The current activities of TB&D and BT Deutschland will be merged into the alliance.

Notes to Editors

BT

BT is one of the world's largest and most successful telecommunications companies. Turnover in 1994 was more than 13 billion pounds and pre-tax profit was 2.7 billion pounds. BT Europe currently employs more than 800 staff in mainland Europe, and has country operations in eight Western European countries plus activity in Central, Southern and Eastern Europe.

It has won major contracts to supply data networks in Europe for SDV, the French shipping company, Eurocontrol, the air traffic system, Microsoft and Nissan. In addition, it launched Concert corporate voice services in the summer of 1994 and major customers include Thom EMI.

VIAG

VIAG is one of Germany's 10 largest companies with sales of more than 40 billion Dm. It has a significant marketing and sales presence in its core areas of energy, chemicals, packaging and logistics. Since it was privatised in 1986/88 its shares have performed well, and VIAG expects this trend to continue.

CONTACT: BTNA 

Jim Barron, 212/418-7860