Fallen broadband rebel accepts BT's £170m

BT has signed a £170m deal with former rival Redstone to look after the one-time rebel telco's national voice network.

BT will take over Redstone's network, taking on 20 staff from the company. All the relevant Redstone assets will also be transferred to BT.

The deal is the first time BT has taken over the voice network of another organisation in this way.

Redstone was one of the companies involved in the local loop unbundling process, aiming to set up an alternative broadband infrastructure to BT's.

A trial site went live near Portsmouth last year, but the roll-out to other areas was cancelled following a catastrophic slide in Redstone's share price and a desperate rights issue to rescue the company from a cash crisis.

Since then the company removed the Telecom from its name and shifted its focus to network integration rather than infrastructure building.

Redstone chief executive Ian Brown said: "We don't see any point in digging up the streets to supply DSL which will just become a commodity. We are focusing on business areas that won't be commoditised."

Nonetheless the Portsmouth SDSL installation is still running, and the company has connected additional customers since the trial phase.

Brown added: "We're out there selling with a vengeance. We aren't going to build any more, that's all."