BT Reportedly looking to offload Radianz

The UK incumbent has hired Citigroup investment bankers to explore the sale of the unit, the Financial Times reported at the weekend, citing three unnamed sources close to the matter. BT and Citigroup declined to comment, but given the background to the resurgence of this rumour, the paper could well be onto something.

Allison Kirkby, still in her first year at the helm of BT, is making big changes as part of a bid to reshape the telco. In May the CEO shared plans to "optimise" BT's Global business, a choice of phrasing that naturally led to talk of divestment. BT Global, which houses the Radianz business, forms part of BT's business division.

With BT now focusing on its UK operations, the time could well be right to say goodbye to Radianz. And it looks like the telco could bring in as much or more than it paid for the business two decades ago.

One of the FT's sources, backed up by another unnamed person, suggested that Radianz could be valued "in the low hundreds of millions of pounds."

In 2005 BT inked a deal to buy Radianz from Reuters for US$175 million, which at the exchange rate of the day came in at about £91 million. It's worth noting though that the purchase formed part of a broader deal that also included a commitment from Reuters to spend around £3 billion over eight and a half years on network services.

It's difficult to put a figure on the financial contribution Radianz makes to BT currently. Overall revenues from the banking and finance sector at Global came in at just over £1 billion in full year 2023, but we don't know how big a part Radianz played in that. And in the most recent financial year BT did not split out its income from that sector at all.

The Business division, which accounts for just under 40% of group turnover, posted a revenue decline of 2% in the year to the end of March to £8.1 billion, compounded by a 5% slide in the fourth quarter. Earnings were down by 16% in the full year.

The FT puts Radianz's EBITDA at between £60 million and £70 million per year, based on information from a couple of people familiar with the business.

With just that information to go on, it seems Radianz would be a good buy for someone. The paper did not speculate on a likely buyer though.

It is not the only BT Global business potentially on the block as a result of Kirkby's new strategy. There has also been talk of a disposal of BT Ireland; Viatel is among a number of interested parties looking at that business, the Irish Times reported last week, noting that the unit is up for sale for the second time in five years. And Italian incumbent TIM last month became the latest name linked to the purchase of BT's remaining assets in Italy, which essentially constitute four data centres and a backbone network.

Given Kirkby's simplification drive and desire to focus on the domestic market, it will come as little surprise if BT announces a deal for any of the aforementioned businesses in the coming months.