BT has put its entire business in Latin America up for sale in the strongest signal yet that the telecoms giant is dialling its attentions back to Britain.
City sources said BT had privately settled on a strategy of offloading ‘everything outside the UK’ to draw a line under overseas controversies and arrest a three-year share price slide.
Chief executive Philip Jansen, who joined BT at the start of the year and took over from Gavin Patterson in February, has already put several of the FTSE 100 firm’s overseas divisions on the block.
These include the troubled Italian arm, which is embroiled in an accounting scandal, as well its Irish and Spanish divisions. Now The Mail on Sunday can reveal that BT’s internal deals team has also been sounding out potential buyers for its sprawling Latin American business.
A sale would mean a retreat from 28 countries – almost half of the 60 countries that BT operates in – underlining the scale of the change in the company’s approach after years of expansion.
Although BT does not publish figures for its Latin American arm, the sale could bag it hundreds of millions of pounds.
Together with the US and Canadian businesses, the Latin American arm pulled in £944 million in revenue last year, although that was a 7 per cent drop on the year before and has been steadily declining.
One source familiar with the sale process said: ‘The mandate [at BT] is ‘everything gets sold outside the UK’.
‘This is a very common theme throughout European telecoms. All of the big motherships – BT, [Spain’s] Telefonica, [Germany’s] Deutsche Telekom, [Sweden’s] Telia, and [the Netherlands’] KPN – are selling off non-strategic assets in countries where they can’t really compete and they want to double down in their home country.’
BT’s overseas arms form part of its troubled multinational division, known as Global Services, which provides IT services to companies around the world.
The company is on a selling spree of its foreign divisions as it looks to refocus on Britain despite continued criticism of its service here as the former telecoms monopoly. It has been attacked for underinvesting in BT Openreach, which controls the cables that run broadband to the home and which rivals rely on.
At BT’s annual meeting this month, Jansen pledged to invest in full-fibre broadband in Britain and said he wants to connect 15 million homes and businesses with superfast broadband by the mid-2020s.
Jansen, former boss of payments giant Worldpay, will have to cut costs to meet that goal and told shareholders that may include reducing the dividend. Selling overseas businesses which are not part of his strategic plan is another way to save money.
The Global Services arm has been under intense pressure since the Italian accounting scandal emerged more than two years ago, forcing the company to write down the value of the business by £530 million. The scandal accelerated a decline in fortunes for former boss Patterson, who kicked off an overhaul of the division before announcing his exit last year, including thousands of job cuts.
The sale process for Latin America is ongoing, along with the other overseas divisions for sale. The deadline for indicative offers for BT’s Spanish business has been set at the end of this month, City sources said. The process is being run by advisers at Credit Suisse, who are also in charge of selling BT Italia. Bank of America Merrill Lynch is handling the sale of the Irish business.
Last week, BT sold its historic headquarters in London near St Paul’s Cathedral for £210 million as part of the cost cutting.
BT may find it tricky to find a buyer for Latin America due to the sprawling nature of the business, which has more than 1,000 staff. And it is facing a potential £204 million tax bill in Brazil. BT confirmed in its annual report in May that the dispute with the Brazilian authorities was ongoing and expected to take ‘many years’.
BT’s share price has been sliding since early 2016 and has reached a seven-year low, valuing the company at £18.7 billion.
Its mobile phone business EE recently launched 5G as the major British operators race to cash in on the new superfast network. BT declined to comment on the sale of its Latin American arm.