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MCI, BT into Latin World
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April 18, 1997: 4:51 p.m. ET
Partnership will tackle fast-growing market; potential blow to AT&T
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NEW YORK (CNNfn) - MCI Communications Corp. and British Telecommunications Plc announced a deal on Friday with the dominant firm in the fast-growing Spanish-speaking market.
Just six months after announcing their own merger plans, MCI and British Telecom said they will form a strategic alliance with Telefonica de Espana. Telefonica, the world's ninth-largest telecom company currently reaches more than 300 million people in Spain, Argentina, Brazil, Chile, Peru and Puerto Rico.
The deal was unwittingly revealed by Concert's newest partner, Portugal Telecom, earlier this week. It deals a blow to British Telecom's arch-rival -- U.S. phone giant AT&T Corp. -- and heralds a major change in the telecom landscape across the Americas and Europe.
Tim Price, chief operating officer at MCI, suggested that AT&T had lost a major battle, something AT&T steadfastly denied.
"We have a globally seamless product and service," Price told CNNfn. "We are going to be investing together with Telefonica and merging with British Telecom. Our focus in no longer on AT&T alone… We're looking at the huge global opportunities that we've got as a result of this action today." (227K WAV) or (227K AIFF)
Despite speculation that Telefonica's old alliance partners, AT&T-led Unisource, might start litigation if it defects to Concert, the Spanish company confirmed that it was setting up a pan-American joint venture between its international unit and MCI.
AT&T had hoped to use Unisource as its expansion vehicle in Europe. But Telefonica, which joins the national carriers of the Netherlands, Sweden and Switzerland in Unisource, had been dissatisfied with the group and said it was "initiating steps to withdraw."
Analysts said the agreement would position the companies to take advantage of the Latin American market as regional monopolies are disbanded. The market is expected to grow from $36 billion to more than $60 billion in the next four years.
"If you are looking to get into Latin America, there is no better partner than Telefonica," said Ray Liguori, Latin American telecom analyst for Merrill Lynch. "This is probably the fastest growing telephone market in the world… All of the governments realize they need to improve infrastructure."
From staff and wire reports
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