[GTE Courted by AT&T ?]
AT&T pressured to find partner
10/07/97- Updated 09:13 AM ET
NEW YORK - WorldCom's bid for MCI has put enormous pressure on AT&T to find a partner. The No. 1 phone company is in talks with several companies, including GTE.
The GTE talks include senior executives, in contrast to negotiations earlier this year among lower-level managers. GTE and AT&T declined comment. GTE shares rose 1 9/16 to $49, reflecting widespread speculation. AT&T closed at $43 15/16, up 3/4.
Since the WorldCom bid, AT&T - in search of a successor to CEO Bob Allen - has held a series of high-level strategy sessions, often late into the evening. It wants an alliance that would reassert its dominance in telecommunications. Other possible partners: Sprint, US West, Teleport Communications Group and Intermedia. All declined comment.
Talks with GTE resumed last week after WorldCom made a $30 billion offer for MCI, which is close to being sold to British Telecommunications.
WorldCom's bid for MCI alters AT&T's horizon. BT would enhance MCI's financial clout and its international presence. But the combination of MCI and WorldCom, ranked No. 2 and No. 4 in AT&T's core long-distance market, would create a new domestic threat. WorldCom also has a high-tech local phone business, thanks to its acquisition of MFS last year. And it has a powerful presence on the Internet through its UUNet Technologies unit.
GTE has a local phone business in 28 states and a new long-distance unit that has won 1 million customers, many of them at AT&T's expense. It also has a powerful new data transmission business, quickly built by the acquisition of Internet pioneer BBN Corp. and its purchase of fiber-optic lines from Qwest Communications.
GTE's chief executive, Chuck Lee, could also succeed Allen at AT&T.
"They are trying to get a merger as well as a CEO. That is probably what is taking so long," says analyst Chris Landes of TeleChoice, a former AT&T employee.
Analyst Richard Toole cautions that an AT&T-GTE deal would be difficult. GTE has a market capitalization - the value of all its outstanding stock - of $47 billion compared with $71 billion for AT&T. "This would not be easy for either company to swallow," he says.
It might have a better chance of winning approval than the ill-fated combination of AT&T and SBC Communications. Those talks broke down amid disapproval by Federal Communications Commission Chairman Reed Hundt.
By Steve Rosenbush, USA TODAY, with Thor Valdmanis contributing
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