Overseas firms win UK phone service licence: International competitors investing millions to establish new networks

THE Government has licensed six more companies, including four large overseas communications groups, to offer a range of public telephone services in the UK. Patrick McLoughlin, minister for technology and trade, said the new licensees are already investing hundreds of millions of pounds in establishing their networks and that the total invested by telecommunications companies in the UK this year will be more than pounds 4bn.

The six companies are: Sprint and IDB WorldCom, both leading US telecoms operators; Telstra, Australia's state-owned telephone company; Telia, Sweden's public telecoms operator; Norweb, the UK regional electricity company; and Videotron, a cable television operator that wants to offer telephone services outside its television franchise areas.

Sprint, WorldCom, Telstra and Telia plan to offer international telephone services for homes and businesses to and from the UK. The licences allow direct telephone traffic only between the UK and three other countries that also permit international competition - Canada, Sweden and Australia. But the companies can then switch calls from these countries on to other parts of the world.

All six new licensees will be able to offer public telephone services within the UK, building their own networks or linking into those run by BT, Mercury and others. Of the four foreign companies, Telstra hopes to offer a service within the UK, but Telia, Sprint and WorldCom said their initial focus would be international calls.

Vincent Gargaro, Sprint's chief executive in northern Europe, said: 'We intend to offer customers significantly better value for money (than BT or Mercury). But it's a question of the quality and extent of the services, not just price.' He said Sprint would initially use networks run by BT, Mercury and other emerging operators to provide links to customers, but that it might build its own network depending on demand.

Mr Gargaro added that the terms on which Sprint can link into BT's network, including the cost, remains an important issue which needs to be resolved.

A spokesman for Telia also said that interconnection to BT remains the single biggest issue in deciding on expansion plans. But he added that Telia, which is due for privatisation, will offer a quality alternative to the international services run by BT and Mercury. The spokesman said the UK licence is Telia's opportunity to gain an understanding of competition in telecoms outside its home market.

Norweb said its licence will allow it to launch a regional telephone service in the North-west of England by the end of 1994. The company, the fifth regional electricity supplier to be awarded a public telecommunications licence, said that its initial target would be businesses.

Norweb's calls may be linked into BT's or Mercury's long-distance networks. The company also has an alliance with Energis, a subsidiary of the National Grid Company, which is building a long-distance telephone network.

The Videotron licence is the first allowing a cable television company to offer telephone services outside its franchise. The company will target the Westminster area, where BT holds the cable franchise, and the City of London.

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