RealTime IT News

BT, AT&T Merger Is "Being Discussed"

[London, ENGLAND] BT indicated in a statement issued over the weekend that it is holding discussions with AT&T with a view to merging more of their respective businesses.

The two companies already have a major joint venture in Concert, the successful launch of which has led to the current discussions.

Observers have for some time recognized that BT and AT&T have similar cultures, having undergone traumatic upheavals in recent years after a long period of monopolizing telecoms markets on either side of the Atlantic.

Sunday's statement from BT did not go so far as to say that a full merger was being considered.

"These discussions include exploring ways of broadening and strengthening the scope of the relationship between BT and AT&T in business services," said the statement, with the warning that the discussions "may or may not lead to any change in the existing alliance arrangements."

To some, it may appear that BT is becoming addicted to structural change, having announced in April a radical restructuring of its business, including the creation of three new international businesses - Ignite, BT Wireless and BT Openworld. The rationale behind this move was to group operations according to operational rather geographical parameters.

As the statement explained, BT's strategic review has been an ongoing process for much of the year, with the aim of maximizing shareholder value, increasing efficiency, and improving services to customers. However, the market has not yet responded by marking up BT shares, which are still hovering just above their 52-week low point.

Having spent lavishly on third-generation wireless licenses, including another US $370 million in Holland in July, BT has made some divestments, including the sale this month of part of its Aeronautical and Maritime division to Stratos Global Corporation for US $222 million.

Later this year, the outcome of the AT&T discussions will become clear, while BT is also expected to announce IPOs for some of its international businesses. In the meantime, it remains to be seen whether the current statement is sufficient to jog the share price upwards.