Reuters Sells Radianz to BT

UK telecommunications vendor BT last week agreed to acquire the Radianz financial network from Reuters for $175 million in cash plus any net cash on Radianz's balance sheet, estimated by BT to total about $200 million. The news follows last year's announcement that the two were in exclusive talks (IMD, Oct. 25, 2004).

Separately, Reuters promised to continue to use Radianz's network to distribute its services in a deal thought to be worth $3 billion to BT over the next eight and a half years. Reuters is migrating its legacy products off its own networks to run on Radianz's IP network.

This deal excludes former Bridge products, which use rival Savvis' network. A Reuters spokesperson declines to comment on the effect on the data services of Telerate, which was bought by Reuters at the end of last year and which also uses Savvis (IMD, Jan. 3).

The acquisition will give BT a strong foothold in the provision of network and communications services to financial institutions, a market where BT executives admit they have struggled for market share against Radianz. Last year, Radianz signed its 1,000th customer for its FIX network, and it provides access to more than 500 services from more than 150 providers.

"Radianz is a really important acquisition because of the range it gives us in financial markets clients... it will mean we're pretty big in this marketplace," says Neil Rogers, president of global solutions in BT's global services division. "We intend to invest and grow to extend our reach worldwide."

Rogers says BT has no plans to make major changes to Radianz's operating model, although he admits that the integration of Radianz is still in the planning stage. "The value we just paid money for is in the proposition, the intellectual property and the management who knows what makes the marketplace tick," he says. Radianz's 880 staff will join the 20,000 staff globally within global services, and BT may also shift some existing BT staff to work for Radianz.

Rogers says that BT plans to migrate the existing Radianz IP network to the model used by other BT services: a network based on Multi Protocol Label Switching. MPLS enables providers to manage different data streams and private networks by labeling packets of data based on importance. This means, for example, that premium services can be delivered alongside others with minimal latency. Rogers says the change will be seamless for customers of Radianz's hosted service.

Harrell Smith, head of the securities and investment group at Celent Communications, says the deal is a win-win for all three parties: BT acquires an important client base, Reuters divests a non-core asset and Radianz gets a parent that is prepared to invest money in its future. Radianz also separates itself from Reuters, which eliminates any concerns that competing vendors may have had about making their services available over RadianzNet, he says.

The deal is subject to approval by the European Commission but is expected to close by the end of April.