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British Telecommunications Plc, which announced its first quarter results on Thursday, has again refused to comment on the future of its proposed merger with MCI Communications Corp, and city analysts are speculating that BT is running scared of MCI’s lawyers. BT’s results show first quarter pre-tax profits up 1.4% at 881m pounds on revenue up 4.1% to 3.789bn and chairman Sir Iain Vallance blamed the 200m pound price cuts forced on the company by the regulators for the flat profits. But investors are too distracted by the impending merger deal to care. MCI, which released its own second quarter figures on Wednesday, is set to make huge losses ($800m this year alone) as it tries to penetrate the local call market in the US, and analysts are worried that BT has unwittingly failed to build a clause into the deal which would allow it to renegotiate the $24bn price in the face of a drop in the value of MCI. In such circumstances, any attempts to reduce the value of the offer would result in legal action. But tight-lipped BT executives implied that it would be weeks rather than days before it made any information public on its emergency review of the situation.

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