BT Shares Climb as CEO Ponders Mobile Phone Link With AT&T
By Kate Norton at Bloomberg News
01 February 1999
British Telecommunications Plc shares rose after Chief Executive Peter Bonfield said the No. 1 U.K. phone company could form a transatlantic mobile phone linkup with AT&T Corp., the top U.S. long-distance company.
The shares rose 36 pence, or 3.87%, to 966.5p, while the U.K.'s benchmark FT-SE 100 index rose 1.97%.
BT and AT&T may link their mobile operations to enhance a planned joint venture and challenge Vodafone Group Plc's proposed takeover of AirTouch Communications Inc., BT Chief Executive Peter Bonfield told the London Sunday Times. Though BT and AT&T said they aren't in talks, the comments sparked optimism about the combined potential of the two companies.
"It's old news that keeps on popping up like a zombie," said Jeremy Lang, who helps manage 300 million pounds ($493.2 million) in equities at River & Mercantile Investment management. A possible mobile tie-up "is quite interesting, and the big picture trends are quite favorable" for BT, he added.
Vodafone, the U.K.'s No.1 mobile-phone company, said earlier this month it planned to buy San Francisco-based AirTouch, the world's largest wireless company, for $62 billion. The move puts pressure on rivals to match the combined companies' ability to offer wireless services to 23 million customers on five continents.
For now, BT and AT&T say they're concentrating on securing regulatory approval for their joint venture to offer voice, data, and Internet services to multinational corporations. The two hope to gain approval for the venture, announced last July, later this year.
BT is also preparing for the U.K. auction later this year of licenses for the next-generation of mobile phones, which will allow high-speed wireless transfer of moving pictures and other data.
"BT is very much focused at the moment on getting the AT&T venture off the ground and making a robust bid for a third- generation mobile license," said Nigel Hawkins, an analyst at Williams de Broe in London.
The U.K. government Friday cleared the way for BT to buy the 40% of Cellnet Ltd., the No. 2 U.K. mobile phone company, it doesn't already own, triggering speculation BT will seek full control to use Cellnet as a platform for its next- generation mobile businesses.
Still, analysts say an eventual tie-up between the two can't be ruled out. A combination of BT and AT&T's mobile businesses would have an advantage over Vodafone AirTouch in the U.S., where AT&T has a coast-to-coast mobile network. AirTouch'sbusiness is primarily in the western half of the U.S. Vodafone and AirTouch are hoping to work with Bell Atlantic Corp. to ensure they can also offer coast-to-coast service.
AT&T also offers wireless service through joint ventures in Canada, India and Taiwan. BT has a stake in mobile phone ventures in France, Germany, Spain and the Netherlands.
The advent of next-generation services with a common technological standard worldwide will make it easier to provide common mobile services and roaming capabilities worldwide. Now, different technological standards in the U.S. and Europe mean mobile phones usually won't work on both continents.
"Vodafone-AirTouch changes the game from providing cellular service on a national or regional basis to providing mobile on a much more global basis," said Philip Carse, an analyst at Commerzbank Global Equities.
"Especially when it comes to next-generation licenses, it makes a lot of sense" for BT and AT&T to join forces.
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