[BT attempt to cut MCI price 'likely to fail' ]
Hasn't this become an ugly delay?
BY ERIC REGULY -London Times
<< BT played down rumours that GTE, America's largest local phone company, was seeking to replace BT as MCI's partner. >>
BRITISH TELECOM'S efforts to lower the œ14 billion price it agreed to pay for MCI will probably fail, one of America's best known consulting firms says.
Audrey Mandela, international senior vice-president of the Yankee Group, which specialises in telecoms consulting and research, said: "It seems to me that BT will have very little room for negotiation . . . The message from MCI is that the contract cannot be renegotiated and is solid."
Ms Mandela, however, does not think that BT will walk away from the deal, even if the price stays the same. She said that BT's international strategy hinged on developing a strong presence in America, where most of the world's largest multinational companies were based.
BT has admitted privately that it probably faces a no-win situation. If it abandons the merger, or refuses to complete it unless the price is lowered substantially, MCI will undoubtedly launch a barrage of lawsuits in the US courts.
If BT agrees to the deal on the terms announced last autumn, it risks a shareholder revolt.
British institutions are putting enormous pressure on BT to pay far less for MCI and may demand the resignations of Sir Iain Vallance, chairman, and Sir Peter Bonfield, chief executive, if the price stays the same.
BT will not reveal its strategy until a wide-ranging review of the merger and MCI's operations is completed at the end of the month. BT played down rumours that GTE, America's largest local phone company, was seeking to replace BT as MCI's partner.
The merger ran into trouble in July when MCI revealed that losses in its local operations would be hundreds of millions of dollars higher than originally forecast. There is a good chance that BT will scale back MCI's local investment if it proceeds with the merger. |
