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BT, MCI join in Concert
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November 3, 1996: 5:28 p.m. ET
The $20 billion marriage of British Telecom and MCI is official
From Correspondent Todd Benjamin
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LONDON (CNNfn) -- A blockbuster merger in the global telecommunications industry became official Sunday as British Telecommunications confirmed it has reached a deal to buy MCI Communications.
The cash and stock deal, valued at more than $20 billion, is the largest takeover in British corporate history and it is believed to be the second-largest deal involving a U.S. company.
The new company, to be called Concert Plc, will be the fourth-largest telecom company in the world, ranked by sales.
"A communications powerhouse."
"The premier telecoms company of the new millennium."
Those are the words executives from the two companies used to describe the deal.
And they're not exaggerating. With annual revenues of $42 billion and 43 million customers in 72 countries, Concert will be a serious competitor to AT&T.
"We think that the combination that we'll now be able to affect will move us one step ahead of that. As I said earlier, we'll be able to offer much more seamless end-to-end services with complimentary sales and marketing skills. So we think we're moving ahead of the competition," said Peter Bonfield, British Telecom's chief executive.
The merger builds on a business relationship struck more than three years ago, when BT bought a 20-percent stake in MCI.
Analysts say that partnership has been a big success. And big is the word of the moment in the dynamic-yet-shifting global telecom market with the leaders in one market or country try to expand into others.
"The market is moving towards needing global networks," said Paul Wignall, a telecommunications analyst with Ernst & Young. "Big companies need the capabilities of the big telecom companies to provide them with worldwide integrated networks. So it makes sense in that pursuit of a business logic."
BT's deal with MCI follows an unsuccessful attempt, earlier this year, to merge with Cable & Wireless.
The U.K. telecom giant is facing growing competition in its own backyard. AT&T announced a strategic alliance with Unisource -- a consortium of four European telecom firms. And MCI's other major U.S. competitor, Sprint, has a joint venture with Deutsche Telekom and France Telecom.
The increasingly complex nexus of partnerships comes at a time of sweeping deregulation in the United States and upcoming liberalization in Europe.
Despite that, the BT-MCI deal faces significant regulatory scrutiny -- especially from Washington. Most are betting the deal will win approval -- and also won't be the last of its kind.
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