AT&T And BT To Form $10 Billion Global Venture To Serve Customers Around The World (via NN thread)
Sunday July 26, 7:53 am Eastern Time
Company Press Release
NEW YORK--(BUSINESS WIRE)--July 26, 1998--AT&T and BT today
announced they will create a $10 billion global venture to serve the
complete communications needs of multinational companies and the
international calling needs of individuals and businesses around the world.
The venture will offer communications services of an unprecedented scale,
scope and level of quality.
The venture will combine the trans-border assets and operations of each
company, including their existing international networks, all of their
international traffic, all of their international products for business customers
-- including an expanding set of Concert services -- and AT&T and BT's
multinational accounts in selected industry sectors.
Further, the two companies will develop an intelligent, managed Internet Protocol (IP)-based global network to be implemented by the venture, its parents and their partners. This network - unparalleled in capabilities and reach - will support services such as global electronic commerce, global call centers and new Internet-based solutions to support global organizations and executives on the move.
Owned equally by AT&T and BT, the venture in its first full year of operation is expected to have revenues of more than $10 billion, growing thereafter in excess of 15 percent a year. The venture is expected to contribute positively to the earnings of both parents from day one. Operating profits are expected to be around $1 billion in the venture's first full year, growing at 15 percent to 20 percent a year. Capital expenditures are expected to be around $1 billion. [Nice opportunity for telecom equipment suppliers like LU/ASND?]
Through the venture, AT&T and BT aim to be the undisputed leader in the fast-growing global communications services market. The venture, together with partners around the world, will provide an outstanding range of global services far greater than either AT&T or BT could provide alone or with their current alliances.
The venture will:
Offer customers the widest range of seamless advanced global
products and services to meet their end- to-end communications
needs;
Give customers unequalled levels of integrated service and support;
Carry trans-border traffic on a greater scale and more efficiently than
ever before.
In a related but separate development, AT&T and BT have agreed to invest a total of $1 billion, split equally between them, in U.S. businesses involved in high technology and emerging communications markets.
BT Chairman Sir Iain Vallance said: ''The creation of this new venture will
be excellent news for our customers; they know that we can - and will -
deliver. By positioning ourselves at the forefront of the global information
age, we will maximize opportunities to grow revenues and enhance profits
for our shareholders.''
BT CEO Sir Peter Bonfield said: ''With such a powerful partner, this new
venture significantly builds on the world-leading position created by BT with
Concert as it moves into the next generation of IP-based networks.''
AT&T Chairman and CEO C. Michael Armstrong said: ''Today's
announcement is a key part of the overall 'facilities-based' growth strategy
AT&T has been aggressively rolling out since January. The moves we have
made will enable our shareowners to benefit from growth opportunities in
the local communications markets of the U.S., and now, in the exploding
global market.''
AT&T President John D. Zeglis said: ''The merging of our international
assets to form this global venture will enable AT&T and BT to deliver in a
unique and powerful way the seamless global services our multinational
customers need and want.''
The venture, which will be named later, will be free-standing with its own
chief executive officer and management team. Its Board of Directors will
include executives from both parent companies. Sir Iain Vallance will be the
venture's first chairman.
With its operational headquarters in the eastern U.S., the venture will
employ initially about 5,000 people worldwide. It will have its own sales
force to serve directly corporate customers in selected industry sectors
around the world.
The venture will stimulate competition in recently liberalized markets by
supporting new competitive operators around the world. Many of them will
be distributors for the new venture and all will be potential customers for its
carrier services. All of this will accelerate efforts to bring accounting rates
down, lowering prices, stimulating international calling and creating new
businesses and new jobs.
Both companies expect that, while the regulatory approval process in
Europe and the U.S. will be thorough, completion is achievable within about
12 months.
Financial Details
Both AT&T and BT will contribute significant revenues, profits and assets to the venture. In the year ending March 31, 1998, the businesses being contributed by BT, including its ownership interest in Concert, would have revenues of $2.3 billion ($2.1 billion after net outpayments on international direct dial) and operating profit of $300 million in the venture. The fixed assets attributable to the businesses were around $1.0 billion.
In the year ending December 31, 1997, the businesses being contributed by AT&T would have had revenues of $5.5 billion ($3.1 billion after net outpayments on international direct dial) and operating profit of $300 million in the venture. The fixed assets attributable to these businesses were $2.0 billion.
The venture's operating profits are expected to increase by 15 percent to 20 percent a year, benefiting from increased sales and synergies such as shared capital expenditures and cost reductions.
For AT&T and BT shareholders, the creation of the joint venture is expected to lead to modest earnings accretion from the first full year and enhance both companies' long term-future growth.
AT&T and BT will account for their interests in the new venture as a joint
venture with proportional consolidation of revenues and profits.
The Global Venture
The venture will have three key profit-generating businesses:
A Global Voice and Data business which will develop network-based
communications solutions for multinational companies and institutions around the world. The business will expand the current activities of Concert by combining it with other AT&T and BT businesses, which currently provide enhanced international voice and data services, such as international private line, frame relay, global software defined networks and value-added IP services. Its services will be sold by the
venture, AT&T, BT and other distributors around the world. Its initial
annual revenues are expected to be around $3.5 billion. It is expected
to have an EBITDA of $1.0 billion and an EBIT of $0.5 billion, growing
in excess of 25 percent a year.
A Global Sales & Services business which will directly serve all of the
communications needs of multinational customers from selected
industries - initially targeting the financial, petroleum and information
technology sectors. It will have its own sales and service team. The
business will begin with more than 250 of its parents' largest
multinational customer accounts from the target industries. The needs
of other multinational corporations will be served through a common
account management system by AT&T or BT account teams, as well
as by their related distributors. Its initial annual revenues are expected
to be more than $3 billion.
An International Carrier Services business that will manage all of the
international correspondent relationships, including transit and
hubbing activities, for AT&T and BT. This will enable customers - both
individuals and businesses -- to benefit as the venture develops
low-cost routes between countries around the world. In 1998, AT&T
and BT's combined international communications traffic, including
international direct dial, is expected to be approximately 25 billion
minutes. The business will establish itself as the industry's
pre-eminent ''carrier's carrier,'' providing wholesale trans-border
services to telecommunications companies and Internet service
providers around the world. Its initial annual revenues are expected to
be around $4.5 billion.
Supporting these businesses, the venture will have a world-class team
managing its public, correspondent international network, which reaches
237 countries and territories, and its managed networks, which have 6,000
nodes in 52 countries covering nearly 1,000 cities worldwide.
Future Developments
AT&T and BT will combine their trans-border network investment programs and adopt a new common network architecture for the venture. This will accelerate the development and deployment of a new global platform linking the world's leading economic centers.
Based on IP technology, the new platform will initially carry voice and data at rates of 200 gigabits per second and will link 100 cities.
Among the business applications this new platform will make
possible are:
highly secure, global virtual Intranets and associated IP-based
applications;
multimedia networks with point-to-point and multicast data, video and
audio capabilities;
a new system of global call centers providing 24- hour, multi-language
customer support;
new communications services to support the traveling executive and
allow virtual meetings to take place with anyone, anywhere.
Transition Period
Both companies are committed to ensuring that customers of their current
alliances are served effectively and continuously. To that end, when BT
completes its purchase of MCI's interest in Concert, AT&T will be appointed
as a non-exclusive distributor of Concert services in the U.S. and will add
extra capabilities to these services, which it will sell as AT&T Concert
services.
As a result of the planned venture, the WorldPartners alliance will not be
extended beyond year- end 1999 and AT&T will exercise its right to exit the
AT&T-Unisource alliance by July 2000. AT&T's existing customers will be
supported throughout the world. All existing AT&T and BT partner,
distributor and customer contracts will be honored.
Between now and the closing of the agreement, the two companies will
align their international operations, strategies and investments, within
regulatory, contractual and legal constraints.
Each company will continue to plan and invest in the infrastructure necessary to ensure that all the resources needed to create a seamless, integrated, best- in-class global network are in place and ready when the venture is launched.
Because this is a growth opportunity for both companies, AT&T and BT do not expect any significant job losses to arise directly out of the formation of the venture.
For more information about the AT&T and BT global venture, visit our
website at http://att-bt- globalventure.att.com.
Editor's note: NEW YORK NEWS CONFERENCE - AT&T and BT will hold
a news conference at NOON EDT today at AT&T's world headquarters at
32 Avenue of the Americas in New York City. AT&T Chairman C. Michael
Armstrong, BT Chairman Sir Iain Vallance and Dan Somers, AT&T chief
financial officer, will make remarks and take questions. Reporters who
cannot attend can participate by calling in prior to noontime at
1-800-700-8174 in the U.S. or 1-612-332-0430 elsewhere. A replay of the
news conference will be available for one week starting at 3:00 p.m. EDT
today at 1-800-475-6701 in the U.S. or 1-320-365-3844 elsewhere. The
access code is 399-702 for both.
SATELLITE COORDINATES - A satellite feed of the noon EDT news
conference in New York is available at the following coordinates: Ku band
satellite TELSTAR 5, transponder 11. Downlink polarity, vertical; downlink
frequency, 11929 Mhz; 97 degrees west.
LONDON NEWS CONFERENCE -- AUDIO BRIEFING - Reporters in the
U.S. who would like to participate in the news conference BT and AT&T
are holding in the U.K. may call 011-44-1296-480-150 at 10 a.m. EDT
today. The password for access is ''July 26th.'' Sir Peter Bonfield, BT's
chief executive, John Zeglis, AT&T's president, and Robert Brace, group
finance director at BT, will make remarks and take questions.
FINANCIAL ANALYST CALL MONDAY, JULY 27 - Reporters can call and
LISTEN ONLY to a briefing for financial analysts at 8:30 a.m. EDT on
Monday, July 27. The call- in number is 1-800-553-0327 in the U.S. and
1-612-332- 0342 or 1-612-288-0329 elsewhere. AT&T Chairman C.
Michael Armstrong, BT Chairman Sir Iain Vallance and Dan Somers, AT&T
chief financial officer, will make remarks and take analysts' questions. A
replay of the briefing is available starting at 11:00 a.m. EDT July 27, for one
week at 1-800-475-6701 in the U.S. and 1- 320-365-3844 elsewhere. The
access code is 399-781 for both.
(The formation of the venture is subject to certain conditions, including
receipt of regulatory approvals, the closing of the merger between MCI
and WorldCom and the purchase by BT of MCI's interest in Concert
and the final negotiation and execution of definitive documents.)
(The foregoing are forward-looking statements within the meaning of
the Securities Act, including statements concerning future operating
performance, AT&T and BT's share of new and existing markets, and
AT&T and BT's revenue and earnings growth rates. Such
forward-looking statements, which are not a guarantee of
performance, are subject to a number of uncertainties and other
factors, that could cause actual results to differ materially from such
statements, including the ability to realize potential synergies and
integrate operations; competitive pressures, including the timing and
level of RBOC entry into long-distance; and the success and market
acceptance of new products and services. For a more detailed
description of the factors that could cause such a difference, please
see AT&T and BT's filings with the Securities and Exchange
Commission. AT&T and BT disclaim any intention or obligation to
update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.)
AT&T AND BT GLOBAL VENTURE
STATS AT A GLANCE
-- International MNC & Carrier Accounts 6,500
-- International Voice Traffic 25 billion minutes
-- International Private Line Circuits 200,000
-- International Network Reach 237 countries
-- Private Line Network Nodes 6,000 in 52 countries
-- Frame Relay Nodes 1,000 in over 40 countries
-- Customer Care & Network Management Centers 12
-- MNC Points of Presence More than 400
-- Year 2000 Revenue $10 billion
Contact:
AT&T BT
Adele Ambrose Jim Barron
908/221-6900/office 212/418-7860/office
aambrose@att.com barronj@nynewyork1.btna.com
888/602-5420/pager
OR
Eileen M. Connolly
908/221-6731/office
econnolly@att.com
888/602-5417/pager
Related News Categories: computers, telecom
|
British Telecom, AT&T Join Forces
By DIRK BEVERIDGE
AP Business Writer
LONDON (AP) -- British Telecommunications PLC (NYSE:BTY - news) and
AT (NYSE:T - news)&T will form a $10 billion alliance to take advantage of
a growing global telephone industry that is becoming increasingly open to
competition, the companies said Sunday.
The biggest telephone companies in Britain and the United States reached
agreement after BT's earlier plan to merge with MCI Communications Corp.
(Nasdaq:MCIC - news) was broken up by a higher offer from rival
WorldCom Inc. (Nasdaq:WCOM - news)
BT chief executive Sir Peter Bonfield and AT&T president John D. Zeglis,
were to outline their plans later Sunday.
''The merging of our international assets to form this global venture will
enable BT and AT&T to deliver in a unique and powerful way the seamless
global services our multinational customers need and want,'' Zeglis said in a
statement.
The companies said their 50-50 venture, to be named later, will be based in
the eastern United States with 5,000 employees. It will be a free-standing
company run by executives from both BT and AT&T.
The BT chairman, Sir Iain Vallance, will be its first chairman.
The telephone giants estimated that the business will have $10 billion in
revenues and operating profits of $1 billion in the first year, which will
improve earnings at each company right away. The companies predicted
15 percent annual growth after that.
The companies initially plan capital expenditures of around $1 billion per year in the business and they plan to bring in more partners in various local markets. The venture will have three main operating areas:
--A worldwide voice and data business that offers telephone networks to multinational corporations and other big instituations;
--A global sales and service business that initially will target corporate clients in financial, oil and information technology fields; and
--An international carrier services business that will develop low-cost communications links around the world for both individual and business customers.
AT&T agreed in June to a $32 billion merger with U.S. cable giant
Tele-Communications Inc. (Nasdaq:LBTYA - news; Nasdaq:TCOMA -
news), and just last week closed an $11.3 billion takeover of Teleport
Communications Group (TCGI - news). |
