Ericsson's not the only one kicking tires.
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SATURDAY JUNE 20 1998ÿÿTelecomsÿ
BT and AT&T discussions inconclusive
By Alan Cane
British Telecommunications, the UK's dominant operator, and AT&T, the largest US long-distance carrier, have held discussions, but they have been neither exclusive nor conclusive.
Yesterday neither company would comment on reports in a US magazine that they were close to forming a joint venture involving their international assets. Both pointed out, however, that they had made no secret of the fact that they were talking to a broad range of possible alliance partners.
In other words, it would be more remarkable if they had not had discussions than if they had. But that did not mean a deal was imminent.
BT insiders say, however, that a US deal can be expected within weeks of the consummation of the merger between the US companies WorldCom and MCI. BT holds a 20 per cent stake in MCI which precludes it, on anti-trust grounds, from concluding another US deal. It will receive some $7bn (œ4.2bn) from WorldCom for its MCI stake when the merger, held up by regulatory difficulties, is complete.
Both AT&T and BT have to rebuild their international strategies. The aim is to cream off lucrative international revenues from multinational customers demanding "seamless" global services. No single carrier or strategic alliance is capable at present of providing such a service.
AT&T's international strategy is based on WorldPartners, a company in which it holds the majority stake alongside KDD of Japan, Unisource of Europe, and Singapore Telecom. This week Telstra, the Australian carrier, agreed to take a 10 per cent stake.
WorldPartners is the core of a loose assemblage of smaller operators which distribute the company's services on their own territories. Michael Armstrong, AT&T's new chief executive, is known to want a stronger international structure.
BT's international vehicle is Concert, a joint venture with MCI, which has now been jeopardised by the US company's defection to WorldCom. BT has had a team in the US seeking possible alliances since WorldCom won the battle for MCI. AT&T could distribute Concert services in the US, but BT already has a post-merger distribution agreement with WorldCom, albeit one that will probably be short-lived. Moreover, AT&T is weak in local markets.
Possible alliance partners include the local carrier GTE, but it has few customers that do much business in Europe. A better bet would be Bell Atlantic, the regional US operator.
Both of these would have fewer obvious structural drawbacks than a tie-up with AT&T. Unless, that is, the two companies believe internet telephony and other innovations make it imperative that old enemies join forces to ward off the threat of the new challengers such as WorldCom, Colt, RSLCom and Mannesmann.
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