BT buys out Concert from MCI in pounds 61m deal
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Your support makes all the difference.BRITISH TELECOM yesterday moved another step closer to severing its links with MCI, its failed US merger partner, by buying out MCI's stake in its Concert subsidiary.
BT is paying $1bn (pounds 61m) for the 24.9 per cent holding in Concert, which specialises in offering managed telecom services for large multinational companies.
The move gives BT full ownership of Concert for the first time. However, the unit is set to be injected into BT's joint venture with AT&T, the US long-distance operator, if their $10bn alliance is cleared by the regulators next year.
The deal with MCI will be completed when the US group's merger with WorldCom is finally cleared by the US Federal Communications Commission later this month. At the same time, WorldCom will pay BT $7bn in cash in exchange for its 20 per cent shareholding in MCI.
Analysts said the price BT had paid was largely as expected. The deal values Concert at about $4bn - a multiple of about four times its annual revenues. Concert currently has 3,800 customers in more than 50 countries.
BT said the transaction would have a "negligible" effect on its earnings. In the City, BT shares rose 18.5p to 823.5p.
The company added that the price had been agreed by negotiation between the two parties.
The Concert stake was a leftover from BT's long-standing alliance with MCI, under which the US group distributed Concert services to its multinational customers.
Although the venture was initially very successful, the relationship turned sour when BT agreed a merger with MCI, only to renegotiate the deal after MCI's performance turned out to worse than expected. That opened the door for WorldCom, which trumped BT's offer with a $42bn bid.
Following the completion of the WorldCom-MCI merger, MCI will continue to distribute Concert services on a non-exclusive basis for two years. In addition, MCI and Concert will continue to support contracts signed before the end of that period for a further three years.
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