AT&T, BT link...
By Emily Church, CBS MarketWatch
Last Update: 10:30 AM July 27, 1998
NEW YORK (CBS.MW) --
.....On Sunday, AT&T (T) and British Telemmunications (BTY) confirmed
they are peeling off their international networks and traffic to
form a $10 billion joint venture focused on
multinational business customers and e-commerce
that will be based in the U.S.
Moreover, the two telephone giants are pooling
investments in technology to build an Internet
service that carries voice, data and video at a
high rate of speed targeted at businesses in 100
cities.
AT&T's (T) stock traded up 1/16 to 60 points on
the opening, while BT's stock climbed over 10
percent to a record high in London.
Regulation woes?
The two are turning over more than 250 of its
parents largest multinational business customer
accounts to launch the new, as-yet unnamed
venture. The venture is expected "to lead to
modest earnings accretion" for shareholders in
the first year. See company statement.
While the companies expect regulators to
back the venture within 12 months,
telecoms analyst Jeffrey Kagen said over
the weekend that the two companies "are
in denial" if they believe regulators will
bless the pact.
The companies expect the 50-50
partnership to deliver operating profits of some
$1 billion in its first full year, growing
between 15-20 percent a year. Revenues, which
are expected to reach $10 billion in its first
year, are seen increasing over 15 percent a
year.
AT&T and BT have scheduled a press
conference in New York at noon EST on
Monday.
Other highlights of the venture include:
An international wholesale carrier
business to offer low-cost routes for phone and
Internet Service Providers (ISP)s.
Invest a total of $500 million each in
U.S. businesses involved in high
technology and emerging communications markets.
The global ISP business, an expansion of BT's
Concert
services, is expected to contribute revenues of
$3.5 billion a year, growing in excess of 25
percent a year.
The global sales and services portion of the
venture will
initially target the financial, oil and
information technology industries.
Emily Church is a reporter for CBS MarketWatch. |
