British Telecommunications plc has confirmed that it will buy back 24.9% of Concert Communication Services - its joint venture with MCI Communications Corp. - from MCI.
After Monday's tumultuous news that BT plans to sell its 20% stake in MCI to WorldCom, Inc. for $7 billion and will back out of its deal to acquire MCI, today's news will sever the last existing tie between BT and MCI. Concert Communication Services - a joint venture telecommunications services company owned 75.1% by BT and 24.9% by MCI - will become wholly owned by BT after the repurchase takes place.
"It's a natural progression," said a BT spokesman in relation to the buy-back of MCI's stake in Concert. "It's tidier and makes the amicable divorce complete."
BT has always held the right to buy back MCI's shares in Concert. But BT chief executive officer Peter Bonfield said at a press conference Monday that the company was not sure if it would exercise that right or not. The BT spokesman said today, however, that the buy-back had been part of the original agreement between WorldCom, MCI and BT.
Concert Communication Services, which offers products such as virtual private networking to global customers, has been pivotal to BT's international strategy since it was founded in 1994. However, now that BT's international merger with MCI will no longer go through, Concert has become BT's most important pawn in the goal of offering communications to international customers. Bonfield was quick to point out on Monday that BT's global strategy "continues to be built around Concert."
Even after BT buys MCI's 24.9% stake, the new MCI WorldCom company will remain a nonexclusive distributor of Concert services, officials said. If MCI had remained a partial owner of Concert Communication Services, MCI WorldCom could potentially "compete with itself" in some international markets because the company plans to offer its own global services, said the BT spokesman. With BT as a full owner, this conflict will be eliminated and BT will be free to sign as many nonexclusive distributors of Concert services as it pleases, the spokesman said.
BT plans to complete the purchase of MCI's stake in Concert Communication Services at about the same time the WorldCom-MCI deal goes through (in about nine months), the BT spokesman said. The British telco did not say whether the move would result in management or staff changes in Concert's Reston, Va., headquarters or other international offices.
