International Telcos

Companies look to bounce back from debtor's blues

If misery loves company, AT&T and British Telecommunications might look like perfect partners. Less than a year ago, analysts predicted the two struggling giants would merge to salvage their vanishing long-distance business.

Instead, they are breaking up a joint venture called Concert that has hit some sour notes. Concert, a provider of Internet and telecommunications services to multinational companies, is expected to end up in AT&Ts hands as debt-laden BT tries to shake off a legacy of government ownership.

Across the Atlantic, meanwhile, AT&T Chairman C. Michael Armstrong hopes to unlock hidden value in broadband, wireless and business services through a breakup that will create four separate AT&T shares.

While BT is trying to fan the dying embers of investor enthusiasm through new leadership, financial markets appeared thoroughly underwhelmed when British Broadcasting Corp. Chairman Sir Christopher Bland stepped into the BT chairmanship in April.

Appearing somewhat desperate to raise cash by offering rights to discounted stock to existing shareholders, BT announced an even greater garage sale that includes its London corporate headquarters.

Certainly, BT is not alone in failed ventures or heavy debt. France Télécom and Deutsche Telekom carry similar baggage after aggressive efforts to expand wireless and data networks in a land-grab atmosphere that reversed into a stampede of investor fear. The two companies cashed in their remaining 10 percent stake in a joint venture with Sprint called Global One, adding to the evidence that global telecom ventures simply dont work. The jury is still out on mergers, however. And Sprint is seen as one of the most inviting targets for the foreign telcos.