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.
