Concert JV to be disbanded next week

ITworld.com –

British Telecommunications PLC (BT) and AT&T Corp. are poised to dissolve their struggling joint-venture telecommunication carrier Concert Communications Co. by the middle of next week, according to a report published Friday in the Financial Times newspaper.

As part of the corporate divorce, AT&T will take control of the U.S.-based Concert customers while BT will leave the union with the European assets it initially contributed to the joint venture, the report said, citing a source close to the final break-up talks.

BT and AT&T could not immediately be reached for comment.

The companies have spent the past few months negotiating the future of Concert, a 50-50 joint venture that has been losing a reported US$1 billion per year, and in more recent months, up to 20 million pounds (US$28.9 million) per week.

Concert lost 81 million pounds for its first fiscal 2001/2002 quarter, ended June 30, BT said in July, when it announced its quarterly results. Due to a weak wireless market and international competition, Concert had to reduce its pricing while its network capacity utilization remained low, BT said at the time.

Concert currently employs 5,900 people worldwide with $7 billion in annual revenue, according to additional figures released by BT last month.

As part of the final settlement, which is expected by next Wednesday, one side may have to issue a cash payment to the other, the FT said.

Concert, which was first announced in July of 1998 and formally launched in January of 2000, was designed to serve multinational customers, along with ISPs (Internet service providers) and telecommunication carriers with an international network. The union was also seen as the beginning of a possible merger between the U.K. and U.S. companies.

But Concert has since been plagued by rumors of its demise due to internal strife between BT and AT&T.

Last month, in a conference call outlining BT's plans to spin off its wireless division, executives admitted that any dissolution of Concert would include "substantial" cash and noncash costs, including large employee layoffs.

Both BT and AT&T have asserted that regardless of Concert's future, Concert customers will continue to receive uninterrupted services, and that each company would want to retain the customers that they had when the joint venture was launched.

BT and AT&T contributed 207 corporate customers each to Concert at the time of its launch, a Concert spokesman said last month.

BT, in London, is at +44-20-7356-5000, or http://www.bt.com/. AT&T Corp., based in Basking Ridge, New Jersey, is at +1-908-221-2000 or http://www.att.com/. Concert, in Chicago, can be contacted at http://www.concert.com/.

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