London, UK-based BT will pay a minimum of 116m euros ($154.3m) to acquire the remaining 74% of Albacom that it does not already own from its three partners, which will then give it a 100% ownership. As part of the deal, ENI, BNL and Mediaset will also settle their respective shares of Albacom’s outstanding bank loan, of which BT’s 26% share accounts for 65m euros ($86.5m).

The actual amount BT will pay for Albacom will depend on the company’s profit performance over the next five years, with some 55m euros ($73.2m) of the total being deferred. BT said that if Albacom exceeds its targets by 2008/9, the total cost to the company will not exceed four times Albacom’s earnings before interest, tax, depreciation and amortization. The company will also retain its existing lease obligations of 230m euros ($305.9m).

As part of the agreement, BT’s Global Services division also signed contracts with ENI, BNL, and Mediaset worth at least 750m euros ($997.5m), to manage a substantial part of their communication services for at least five years.

Milan-based Albacom is the second largest telecoms operator in Italy, behind incumbent Telecom Italia with an 11% share of the market. It claims to be the first and largest operator in Italy focused solely on business clients for whom it provides data, voice, and internet services. The company uses BT’s European network infrastructure, as well as a fibre-optic network it gained through the acquisition of network operator Basictel. It claims to have a list of some 225,000 customers including the Italian Stock Exchange, Bari airport, Chiesi Farmaceutici, Confindustria, University of Bologna, and the Italian Alpine Troops.

Albacom was set up in 1995 as a joint venture between BT and BNL. It later saw an increase in its number of shareholders when Mediaset took a 19.5% stake in the business in May 1996 and ENI a 35% stake in December 1997. In its most recent fiscal year ended March 31, 2004, Albacom reported revenue of 655m euros ($871.2m) and EBITA of 39m euros ($51.9m). The company, which employs approximately 1,450 staff, also has offices in Turin, Bologna,Genoa, Padua, Florence, Pescara Naples, Bari, and a call center in Palermo.

BT said it expects to achieve annual cost savings of some 20m euros ($26.6m) through a period of restructuring at Albacom, and expects the acquisition to slightly affect its earnings per share in 2005/6, and then become accretive to earnings by 2006/7.

This is the second large-scale services acquisition BT has made in the past month, adding to its 520m pounds ($964.5m) takeover of network services company Infonet Services Corp. BT is buying out Infonet’s shareholders, which include the largest Dutch telecom operator, Royal KPN, Swedish-Finnish TeliaSonera, Spain’s Telefonica, Swisscom, KDDI Corp of Japan, and Telstra of Australia.

The Infonet and Albacom deals signal the resumption of BT’s drive to become a global force in telecoms services. BT has been trying to reinvent itself as a credible services provider after struggling with falling revenues at its core fixed-line business, and no mobile operation to act as a growth engine.