Business Outlook: A sad day for Britain's international ambitions
Tuesday 11 November 1997
Having been forced for a second time to abandon its US ambitions, BT now looks to be a chronically overcapitalised company. BT executives are keen to stress that the pursuit of an aggressive international strategy - which presumably means acquisitions - remains a priority, but even so, there is going to be a lot left over for shareholders who can happily contemplate very considerable capital repayments.
Better still from a City perspective, the affair may perversely have turned BT from hunter into hunted. This is the second big setback for BT in the US in five years. Its first attempt to expand there through the acquisition of the mobile phones company, McCaw, was thwarted by a combination of regulators and AT&T. This second failure looks uncannily like a question of the US conspiring one way or another, consciously or unconsciously, to keep the foreigner out as a major league player in its domestic telephones market. If telecommunications is becoming a bid or be bid for business, BT may just have found itself relegated to the latter category.
BT has made itself naked in more senses than one. During the course of the regulatory exchanges over MCI, the British government was persuaded to abandon its special share in BT. If BT remains as overcapitalised as it presently is, it becomes a potentially attractive target and with the special, protective share now gone, there's nothing to stop the likes of AT&T bidding.
While this would still seem a rather unlikely end game, it is none the less possible to see a bid premium developing in the BT share price. More good news for shareholders, then. From a short-term shareholder value perspective, it is usually better to be the object of someone else's strategy than to have one yourself. What of the longer-term outlook though? BT still has plenty to go for in Europe and the Far East but, deprived of a significant position in the world's largest telecoms market, it may find itself permanently assigned to the second division of telcos. That's the big danger and that is also why BT must strive for a worthwhile working relationship with MCI's new master, WorldCom.
There was always something a little bit intangible about the rationale for the MCI takeover. It was partly about the importance of size in the rapidly changing global market place for telecommunications, partly about the marrying of MCI's entrepreneurial culture with that of BT's more defensive, public telco culture and the opportunity value that might create in deregulating European markets. And it was partly about tapping into the fast growing international market for smart, business orientated telecommunications. Unfortunately, it could always be argued that the two rival suitors for MCI, WorldCom and GTE, were more compatible and logical partners. It's a shame none the less. For a time there, it looked as if Britain was in with a real chance of joining the world leaders. That may now have gone for good.
- 1 East 17 bandmember Brian Harvey in 'very desperate situation’
- 2 Is this bridge haunted by the ghost of nu rave?
- 3 Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
- 4 The West has it totally wrong on Lee Kuan Yew
- 5 Scientists have discovered a simple way to cook rice that dramatically cuts the calories
East 17 bandmember Brian Harvey in 'very desperate situation’
Is this bridge haunted by the ghost of nu rave?
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
Saudi Arabia says it won't rule out building nuclear weapons
Germanwings plane crash: Andreas Lubitz 'had eyesight problems' and woke from nightmares 'screaming we’re going down'
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
The West has it totally wrong on Lee Kuan Yew
Revealed: Putin's army of pro-Kremlin bloggers
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...