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Tuesday, 16 October, 2001, 15:38 GMT 16:38 UK
BT axes AT&T joint venture
BT/AT&T graphic
British Telecom has scrapped its loss-making joint venture with US telecoms firm AT&T.

The closure will result in the loss of 2,300 jobs - almost 40% of Concert's workforce.

Key changes and costs
Formed July 1998
Joint investment of $10bn
Terminated October 2001
2,300 job losses
BT - $2bn charge
AT&T - $5.3bn charge
Concert's losses this year estimated at $202m
It will cost BT a total of $2bn (1.4bn) in impairment charges and restructuring costs, and AT&T $5.3bn.

At the creation of the joint venture in July 1998, BT chief executive Sir Peter Bonfield called the $10bn investment "good for customers, good for employees and good for shareholders".

But the venture - aimed at international corporate business - turned out to be nothing but a drain on profits.

Analysts say the end of Concert marks the end of BT's ambitions to conquer the global telecoms market.

BT and AT&T have also terminated their Canadian joint venture agreement, releasing BT from its commitment to invest 725m in AT&T Canada before the middle of 2003.

Targeting the multinationals

BT has been haggling for several months over how to disentangle the venture with AT&T.

Concert employs 6,300 staff worldwide, including 2,200 in the UK.

I am glad that we have regained control of our own destiny

Sir Christopher Bland
BT Chairman

It was founded in order to cash in on the synergies between large corporate customers in London and New York, offering services to multinational businesses.

But Concert found there was significant overlap between its operations and those of its parent companies, which had their own business-oriented divisions.

In a statement, BT said the telecoms market had witnessed a period of "unprecedented change" and that the venture no longer fitted with market conditions.

"I am glad that we have regained control of our own destiny in the provision of services to international customers," BT chairman Sir Christopher Bland said.

Those Concert workers not being made redundant will be folded back into BT and AT&T respectively.

Stemming losses

BT is in the middle of extensive reforms aimed at cutting its debt mountain, which was once pegged as high as 30bn.

The firm has already sold some assets, carried out a 5.9bn rights issue and demerged its BT Wireless division.

But it has abandoned plans for a wider-reaching break-up, including splitting off the retail division.

The end of the three-year partnership with AT&T will help stem further losses.

But BT will take a 1.2bn net impairment charge in order to unwind Concert in the third quarter of the year, and a further 200m in exceptional charges resulting from BT's share of redundancies and transition costs in the second half of the year.

In the City, BT shares closed 6.5p lower at 326.75p on Tuesday.

The BBC's Rory Cellan-Jones
"Over three years BT built up huge debts in its quest to become a global business"
See also:

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BT 'to ditch Concert'
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BT attacks debt mountain
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