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November 25, 1997updated 03 Sep 2016 7:05pm

BT’S BONFIELD BLAMES MCI FAILURE ON SHAREHOLDERS

By CBR Staff Writer

British Telecommunications Plc chief executive Sir Peter Bonfield has blamed its failure to take over MCI Corp on BT’s risk averse shareholders. The original $23bn take-over was scuppered by BT’s re-negotiation of terms with MCI in August (CI No 3,232), that slashed the price to a level where WorldCom Inc could offer $30bn and then trump competitor GTE Corp’s offer with a $54 per share deal, worth $37bn, having convinced analysts and shareholders that it had found further value in the merged company. Bonfield said that BT couldn’t do the same because an offer over the $50 per share mark would have left it looking at an unacceptable risk. It had already calculated an initial short term reduction in earnings by 5% to 7%, and shareholders wouldn’t accept a further reduction in earnings. Bonfield was putting a brave face on the complete failure of BT’s international long-term strategy, saying that the MCI/BT joint venture Concert would give it some sales in the US market, as it is now free to sell to multinationals in North and South America – previously MCI’s brief. But he wouldn’t disclose if there were plans afoot for an alternative acquisition in the US market, or how BT was going to use the $7bn cash that it got for its 20% stake in MCI. He made the general comment that BT was interested in investment in turbulent markets, referring to Europe and the US, both due for full telecoms deregulation on 1 January 1998. BT is also looking to scoop companies before the market has anticipated the value, but wouldn’t confirm or deny if an acquisition was planned within the next year.

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