BellSouth sizes up Vebacom

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The Independent Online
BellSouth, the largest regional phone company in the US, is evaluating a deal to join Vebacom, the German telecommunications partnership, following the withdrawal by Cable & Wireless from the alliance.

C&W pulled out of Vebacom a week ago blaming "differences in priorities" with Veba, the German utility giant and its partner in the venture. The two sides had clashed over the inclusion of RWE, another large utility, in the link-up and the German companies' ambitious plans to invest billions of Deutschmarks building a fixed telephone network. Veba is to pay C&W pounds 820m to buy out its 45 per cent stake in Vebacom.

The move by C&W has already been seen by analysts as the precursor to a shift in the pattern of worldwide telecommunications alliances, with widespread speculation that the British group is soon to joint the Global One partnership between Deutsche Telekom, France Telecom and Sprint of the US.

Sources suggested BellSouth's interest in Vebacom was a natural progression in its German ambitions. The company, based in Atlanta and providing local phone services to 21 million customers in nine US states, already has a mobile telephony partnership with Veba in the E-Plus alliance. BellSouth took a 21.4 per cent stake in E-Plus in 1993.

BellSouth, the sources claim, had held negotiations to partner Veba in fixed phone lines before the C&W tie-up to form Vebacom. The US operator has aggressively built up a portfolio of alliances and investments in 17 countries outside the US. It also has a strong enough balance sheet to fund the likely pounds 500m cost of joining Vebacom, with post-tax profits last year of $2.86bn (pounds 1.8bn).

A spokesman for BellSouth declined to comment on the development. "We talk to everybody and there's no secret in that but we never discuss speculation."

Another regional US phone group, SBC, had been put forward as a possible new partner in Vebacom. However, one senior executive close to the alliance dismissed the idea as "unlikely".

Separately, Cable & Wireless yesterday revealed the third senior executive appointment at C&W Communications, the pounds 5bn group formed out of the merger of its Mercury Communications subsidiary with three cable companies. Martin Hayton, 41, is to become director of human resources. He is currently personnel director for Hong Kong Telecom, in which C&W has a near 60 per cent stake.

Sources suggested that Mercury's head of personnel, Robert Johnston, had been seen as the most likely internal candidate, but his appointment had been rejected by Dick Brown, C&W's chief executive. It has also emerged that Christopher Chadwick, Mercury's head of customers services, resigned from the company just before Christmas for "personal reasons". Peter Howell- Davies, Mercury's chief executive, has been taking responsibility for the customer services job, a key role in Mercury as it battles with BT and other rivals, until the formation of C&W Communications, planned for April.