AT&T says IBM deal will help plans for BT venture
NEW YORK, Dec 8 (Reuters) - AT&T Corp. said Tuesday
its plan to buy IBM Corp.'s global corporate networking
business will help accelerate the telephone giant's plans for
its proposed international alliance with British
Telecommunications Plc .
AT&T earlier said it planned to buy IBM's Global Network
business for $5 billion in cash. The two companies also agreed
to various outsourcing deals under which AT&T will handle IBM's
data networking needs, while IBM will handle some of AT&T's
applications processing and data management work.
The Global Network business provides a variety of data
networking services for clients, including setting up and
managing their internal networks and providing external
Internet connections.
The business serves roughly 35,000 corporate customers in
900 cities in more than 100 countries around the globe, and
provides Internet access to more than 1 million individual
users in 59 countries.
The acquisition gives AT&T a massive jump-start on its
proposed international joint venture with BT. Global Network
has a presence in 93 cities out of 100 cities where AT&T and BT
had planned to build new networks, AT&T said.
AT&T said the AT&T-BT venture had planned to spend $5
billion to enter those 100 cities. Now, the venture will be
able to delay some of that planned spending or spend money in
different ways.
"We're not going to have to do as many things as we had
thought we'd have to do initially...it may delay some capital
spending, it may eliminate some. It will help us save some
money but I'm not ready to say how much," AT&T Chief Financial
Officer Dan Somers told reporters following the AT&T-IBM press
conference.
AT&T said it does not expect its Global Network acquisition
to complicate the regulatory review of its planned venture with
BT.
European antitrust regulators last week expanded their
probe into the proposed joint venture, citing concerns the two
companies would have too much control in the market for
corporate global telecommunications services and international
carrier services. The European Union also said it was concerned
the companies would create or strengthen a dominant position in
Britain.
But AT&T said it does not expect the deal to affect the
expanded probe.
"The amount of this network that would affect the joint
venture...I do not consider to be material and I think the
regulators, when they look at it, will agree with me," AT&T
Chairman C. Michael Armstrong said during the press conference.
Shares of AT&T, the second-most active issue on the New
York Stock Exchange, gained $3 to $67.75. IBM added $2.06 to
$169.25, also on the NYSE, bucking weakness throughout the
broader market.
(( Jessica Hall, New York newsroom 212-859-1729))
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