Monday, July 27, 1998 Published at 18:26 GMT 19:26 UK
Business: The Company File
Global telecoms giant emerges
BT Chief Executive Sir Peter Bonfield announces pact
British Telecom has unveiled an global joint venture with US company AT&T.
The companies will be sharing international networks, traffic and products to offer a range of telecommunications and information services to large companies across national borders.
There will be no sharing of equity between the UK's biggest phone company and the largest American long-distance operator in the 50:50 venture.
From a base in the US, the new company will employ 5,000 people by the year 2000, many in Europe.
It will be headed for the first two years by BT chairman Iain Vallance, who will then hand over to an AT&T executive.
Multinationals to benefit
The new global venture is designed to provide a comprehensive service to multinational corporations which account for an estimated 20% of international telecoms traffic.
They are likely to be offered private networks with short-code access for their offices around the world, with full data-transmission and video conferencing facilities.
International telephone call centres could also be created with one 800 number allowing access from anywhere in the world.
A greatly increased bandwidth for international internet traffic could also be provided.
The two partners are initially targeting the large financial institutions and the international oil companies as their biggest customers.
But personal customers could ultimately benefit from cheaper international call rates if the new networks significantly increase capacity.
Each company will have to dissolve its existing international alliances. AT&T will exit from its global alliance, WorldPartners, within a year, and from its European partnership, Unisource, by 2001.
BT's existing joint venture, Concert, a global telephone network for multinational businesses, will become the template for the new company. The partners will buy out the 25% stake held in that venture by rival MCI.
The new group's main European rival will be Global One, the international alliance of recently privatised Deutsche Telekom, France Telecom and the US long distance company Sprint.
BT has been seeking a US partner since the collapse of its $24bn merger with MCI Communications Corporation last year. The new company will be seen as a rival to the merged MCI-WorldCom group, which has just been approved by regulators.
He said services offered by the new company would include global electronic commerce, multimedia conferencing and public access to the Internet.
BT to benefit
BT's Chairman Sir Iain Vallance said in a statement: "By positioning ourselves at the forefront of the global information age, we will maximise opportunities to grow revenues and enhance profits for shareholders."
The announcement has been greeted as good news for consumers and share holders.
BT's share price on the London market rose initially by nearly 10%, but slipped back by close of trade in a weak market to finish up 43p at 868p, a 5% gain.
AT&T's share price has suffered lately as the scale of its takeover ambitions have led to fears that its value might be diluted.
There are still regulation hurdles which might prevent it getting off the ground at all.
The Federal Communications Commission is expected to make a decision on the merger next month.
The Company File Contents