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Monday, 9 July, 2001, 19:49 GMT 20:49 UK
BT could scupper AT&T restructuring

British Telecom has added to the woes of AT&T with the news that the US telecommunications giant could need BT's permission to pursue its massive restructuring plan.

In a letter last Friday, BT told AT&T Wireless Services, a former unit of AT&T that began operating as its own entity on Monday, that legal agreements bind the two parties, according to a report by Dow Jones news service.

AT&T chairman C. Michael Armstrong speaks at the company's annual meeting
AT&T chairman C. Michael Armstrong has his hands full pushing through his restructuring plan

AT&T Wireless made BT's complaint known via a filing with the US Securities and Exchange Commission, which oversees stock-market transactions, including new stock floats.

"While it is not clear whether British Telecommunications believes that its consent is required for the split-off of AT&T Wireless Services, and AT&T does not believe such consent is required," the filing said, "it is possible that British Telecommunications will in the future assert that its consent was required for the split-off."

Agreements made between BT and AT&T may bind the newly formed AT&T Wireless to non-competition clauses and exclusive purchasing agreements, Dow Jones reported.

Concert clash

This latest controversy follows a clash earlier this month between the two telecommunications behemoths over the assets of Concert, an international corporate telecom joint-venture.

Concert was created three years ago to manage the telecom giants' large multinational clients.

The companies remain divided on how to split Concert's assets and customers, with an announcement expected in the coming months according to press speculation.

Concert's performance has consistently failed to live up to expectations, with managers complaining that it is often competing for business with its owners.

A sale could help reduce British Telecom's debts. Its debt mountain of about $30bn at the beginning of the year is now on track to be halved this summer following sales of parts of the international business and a rights issue.

Restructuring plan

AT&T announced its restructuring plan in October in a move aimed at fostering new growth and increasing flexibility.

The company has been shifting its business away from its core telephone business to more lucrative wireless, cable television and internet services.

Once the US phone company, the AT&T that remains after the 1984 break-up of the original "Ma Bell" is seeking to further divide itself into four separate entities, each trading under its own symbol on Wall Street.

Monday's launch of AT&T Wireless represents the company's first part to be broken off.

Plans for other units include one dedicated to broadband and cable services; a consumer division; and a business-services unit, which will trade under the current AT&T New York Stock Exchange symbol "T".

In a press release marking the occasion of AT&T Wireless independence, the parent AT&T said its "restructuring plan remains on track."

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