AT&T, BT to pool global networks and business services
PC Week Monday July 27 9:38 AM ET
By John Rendleman, ZDNet
AT&T Corp. and British Telecommunications Inc. on Sunday unveiled
an agreement to combine their respective international network
facilities and operations to form a global network services
entity. The joint venure wll be capable of offering multinational
corporations seamless trans-border communications in more than
200 countries.
The AT&T-BT venture is expected to earn in excess of $10 billion
in revenues during its first full operating year and from day one
will serve about 6,500 multinational customers and carrier
accounts, said AT&T and BT executives at a New York news
conference Sunday announcing the deal.
Assets that the companies will contribute to the planned venture
include all of the companies' respective international networks
and global traffic, all of their global services geared to
business customers and multinational customer accounts from AT&T
and BT in select industry segments, officials said.
The value of the fixed assets of AT&T's international operations
that it will contribute to the venture are valued at $2 billion,
while the fixed assets that BT will bring to the table are valued
at $1 billion, said officials at the companies.
The joint venture will be headquartered in the eastern United
States and will employ about 5,000 people around the globe,
officials said. It will operate independently and will have its
own CEO and management team, with BT's Sir Ian Vallance serving
as its first chairman.
Formation of the venture, which the companies expect to complete
within a year, presents "a very powerful and compelling
proposition to multinational customers worldwide," said Peter
Manning, president and CEO of BT's majority owned Concert
Communications Co. global services subsidiary in Reston, Va.
"I'm most excited that this is going to allow us to develop new
IP-based services and continue to develop Concert's next
generation of ATM services," which are on track to be launched in
the fourth quarter, Manning said.
The timing of the deal is dependent on a number of factors,
primary among them the expected closing this summer of the merger
between WorldCom Inc., Jackson, Miss., and one-time BT merger
partner MCI Communications Corp. of Washington, D.C.
Once that deal is completed, BT will execute its right to
purchase back from MCI the 25 percent share of Concert currently
owned by MCI. BT will then contribute all of its Concert assets
to the joint venture with AT&T, said officials.
Under terms of the AT&T-BT agreement, AT&T will serve as a
non-exclusive distributor of Concert services in the United
States, where the alliance's service will be sold under the AT&T
Concert brand. The larger global venture between the companies
will be named later, said officials.
With the BT alliance in place, AT&T said it will exit its
previous international services joint ventures, with AT&T
planning to sever its WorldPartners alliance with several major
European and Asian Pacific carriers by year-end 1999 and to leave
its AT&T-Unisource alliance in Europe by July 2000.
According to AT&T and BT, their venture will comprise three main
businesses, including the first, an international voice and data
services unit, offering enhanced global voice and data services
to multinational customers and other institutions worldwide. The
unit's service portfolio will include international private line,
frame relay, software defined network (SDN) and other enhanced IP
services, with the service being sold by the parent venture,
AT&T, BT and other distributors.
A second business, an international sales and service unit, will
provide comprehensive packages of service solutions to the
largest multinational corporations in selected vertical
industries, which initially will include the financial, petroleum
and IT fields. The unit will immediately begin providing
solutions to 250 of AT&T's and BT's top multinational clients in
the targeted industries, and it will have its own, dedicated
sales and services teams.
The final line of business, a global carrier services unit, will
handle all of AT&T's and BT's international correspondent
relationships with other overseas carriers, including transit and
hubbing arrangements for the exchange of trans-border traffic.
AT&T and BT said the venture will develop a new, IP-based network
platform operating at 200 gigabits per second, capable of
providing secure global intranet applications and multimedia
services with point-to-point and multicast voice data and video
capabilities.
The IP platform, which is envisioned as initially linking 100
cities worldwide, will also support global call centers with
around-the-clock customer support in multiple languages and
advanced remote access services for globally mobile executives.
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