The two companies are rumoured to be close to investing in Japan Telecom, a smaller operator But analysts reckon its sights should be set higher. “They need to pick up a big player which would give them access to large Japanese multinationals,” says John Matthews, principal consultant at industry analysts Ovum. “A deal with NTT or KDD would be a big prize.”A deal in Japan, combined with the long-awaited buy-out of Securicor’s 40 per cent shareholding in Cellnet, would help one of BT shareholders’ other gripes: its unnecessarily strong balance sheet. The company would like to bring gearing up to the 50 per cent level from about 3 per cent at the moment. But shareholders have also made it clear that they do not want the cash returned to them.So BT is looking for investments. But having watched his reputation grow with the help of some clever moves and a following wind, Sir Peter will be reluctant to risk it now.If BT does resist the temptation of bidding for Telecom Italia, nothing could better demonstrate how far the company has come in the past few years.Talking Telecom NumbersBased in St Paul’s, City of LondonChief Executive: Sir Peter BonfieldChairman: Sir Iain Vallance (right)Market Capitalisation: pounds 70bnPre-tax profit 1997/98: pounds 3.2bnTurnover 1997/98: pounds 15.6bnNumber of residential lines:20.1 millionNumber of business lines: 7.8 millionNumber of cellular customers: 4 millionInternet access customers: 500,000Employees: 125,000. PERSONAL DETAILS: Aged 50 Lives in south London Drives K-registered Vauxhall Carlton Estate Pay: pounds 172,000 including bonus in 1998 He sings with the Dulwich Choral Society.

CHALLENGE: “To win the hearts and minds of our customers,” says Mr Saville, following the “monumental flop” that was Talisman, the old Stock Exchange settlement system. His mission is to persuade retail investors to follow institutional investors and “move into an electronic world” where there are no paper share certificates.
CORPORATE BACKGROUND: Mr Saville set up CRESTCo in 1994, while on secondment from the Bank of England. In 1997, he left the Bank to complete the establishment of CREST, the electronic settlements system for corporate securities in the UK and Ireland, which was the successor to the failed TAURUS project CREST was delivered on time and to budget in July 1996. “We have the most capable real time settlements system in the world,” said Mr Saville. He was elected chairman of ECSDA, the association of European Depositories, in March 1998.Prior to joining CRESTCo, he worked at the Bank of England as an economist. From 1986-93, he managed the UK’s $40bn (pounds 25bn) of foreign reserves in bond and money market derivatives worldwide.STRATEGY: Mr Saville sees CREST as a “great technical platform for the future”. The objective is to persuade businesses, regulators and customers to settle additional financial instruments, other than equities, through CREST.Over the next 18 months, gilts and money market instruments will start to be settled through CREST with the hope that unit trusts and other mutual funds will follow at a later date.

Fidelity, M&G, Gartmore and Royal Sun Alliance have all expressed support for the idea. Mr Saville says: “We are giving them the opportunity of a much-enhanced, secure distribution channel to the wholesale market.”According to Mr Saville, electronic settlement through CREST would be cheaper, quicker and would allow customers to make further use of their investment in CREST systems. This, in turn, is expected to drive down costs all round the financial services industry. CREST offers “a single market of excellence in cash market settlement”, says Mr Saville.The industry is now routinely processing volumes thought unimaginable four or five years ago. CRESTCo currently settles about 150,000 transactions each day, worth pounds 35bn Before CREST, one in five trades failed to settle on time. Now that figure has improved to fewer than one in 20, with most of the problems originating in bargains where people are using paper share certificates For large institutions the error rate is below one in 100. Over 80 per cent of the market capitalisation of UK shares are now held in electronic form.