British Telecommunications Plc and its advisers are now poring over the accounts of telcos in the US in an effort to find a new merger target following the collapse of its ambitions to take-over MCI Corp. Two baby bells – Bell Atlantic Corp and SBC Communications Inc – head the list as they were both reported to have contacted BT after its MCI take-over fell apart. Although bolstered by the $7.25bn it will receive from selling its 20% stake in MCI to WorldCom Inc, BT is at a disadvantage since its shares are cheap compared with the rumor-inflated value of telcos in the US. It is barely larger than many of the baby bells and, while it can throw its muscle around in Europe, the MCI debacle shows that it is puny once it crosses the Atlantic and tries to mix it with the big boys. BT has confirmed that it will buy out MCI’s 24.9% stake in its Concert international partnership – leaving it desperately short of partners. It could, of course, snuggle up to some of the bigger players in the US, notably the mighty AT&T, with which it has good relationships. And GTE Corp – apparently unsuccessful in its own ambitions for MCI – has also forged closer relationships with BT during the take-over drama. For the moment, GTE’s cash bid for MCI still stands and WorldCom boss Bernard Ebbers must be nervous as the slide in his company’s shares is cutting the value of its bid as each day passes and it may be a year before the merger is approved by the Department of Justice.
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