Colt Telecom, the European telecoms operator beset by financing problems, bridged its funding gap last week using Morgan Stanley as adviser. The move may spark consolidation in the sector.

The £400m (&euro632m) minimum of extra funding would not have happened without the support of Fidelity, one of the world's largest investment groups and Colt's 47.7% shareholder. Colt's action has prompted several European bankers to say that the time has come for investors to choose between sector winners and losers.