Italian UMTS Auction

British Telecommunications PLC
23 October 2000



              BT OFFER OF LIRE 500 BILLION TO BLU FOR
                    ITALIAN UMTS AUCTION REJECTED


BT today announced that the Italian mobile company Blu,

in which it has a 20 per cent stake, has withdrawn from

Italy's auction of Third Generation Universal Mobile

Telecommunications System (UMTS) licences.

     A BT spokesman said: 'Regrettably, a meeting of the

Blu shareholders has decided that the company should not

continue in the auction process for a UMTS licence. BT

was prepared to support Blu bidding to a higher figure

than the level at which the company withdrew.  It had

shown its commitment by offering substantial one-off ex-

gratia funding of Lire 500bn (258m Euros) to the company

to enable it to continue bidding.'

     Shareholders representing a 52 per cent majority,

comprising of BT, BNL, Mediaset, Italgas and Distacom,

voted to continue in the auction but this was blocked by

Sitech, Edizione Holding and Palatinus. Under Blu's

shareholder agreements an 80 per cent vote in favour was

needed to proceed.
        
     BT was prepared to raise its stake and take more of

the risk in Blu but could not take the amount that the

other shareholders demanded as the price for continuing

the bidding.

     

Notes to Editors

Sitech is a member of the Autostrade Group; Edizione
Holding is a member of the Benetton Group; Palatinus is a
member of the Caltagirone Group.