BT set to build worldwide network

BT is poised to announce a multi-billion dollar scheme to build a worldwide network serving international customers. The network will be the 'glue' binding BT's existing international offerings and be will pivotal in the company's expansion outside its regulated markets in the UK.

The project, thought to be codenamed Cyclone, involves the establishment of sophisticated switching centres - each costing millions of dollars - in between 20 and 30 cities around the globe. These will be the infrastructure on which BT's existing services - Syncordia and Global Network Services - are to be expanded.

Global Network Services is BT's international data communications service, while Syncordia provides a wide range of offerings including voice and video communications. Syncordia already lists IBM Europe and BP among its clients.

The services are targeted at large companies, their customers and suppliers - aiming to supply all their communications needs. It is thought BT could undercut international public telephone networks by up to 15 per cent. Having its own dedicated infrastructure will help keep prices keen.

BT's international strategy is tightly defined as playing to the business user rather than bidding for licences to operate public telephone networks overseas. BT is interested in mobile telephone licences, but again where they fits with corporate clients' needs.

In spite of the high level of investment needed for Project Cyclone, BT is expected to go it alone in building the network. The expenditure is likely to be spread over nine or 10 years.

The company had net debt of around pounds 2.5bn at the last count, although gearing is expected to fall to about 16 per cent by the end of March - very low for an international telecommunications company. BT will also receive pounds 1.1bn from the sale to AT&T of its stake in McCaw, the US cellular radio operator.

BT is also thought to be continuing talks with Electronic Data Systems, a subsidiary of General Motors, with a view to buying a substantial stake.