Company Of The Week

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The Independent Online
BRITISH TELECOM said that profit fell 19 per cent in the three months to June, to pounds 486m, as it lost money competing against former phone monopolies in continental Europe.

As it struggles to compete in Europe, BT is eager to shore up its international businesses and last week announced a planned $3bn (pounds 1.83bn) venture with AT&T, the top US telephone company, to offer voice, data and internet services to large companies around the world. The company's shares rose 9 per cent.

BT's joint ventures in continental Europe, formed to compete in the newly deregulated markets, are not expected to be profitable for another couple of years. Its venture in France, Cegetel, could make a profit this year, however.

Analysts estimate that BT will lose about pounds 300m on its overseas ventures for the year.

The company's plan to create Europe's largest network, connecting 200 cities, is scheduled to begin in the first quarter of next year.

When the venture with AT&T was announced last Sunday, BT said it will take at least a year to win regulatory approval and is expected to add 2 pence to earnings in the first year, 3 pence in the second year and 4 pence in the third.

Analysts are sceptical of those estimates, given that other similar ventures such as the Global One alliance lose money.

BT said its first-quarter results were also hit by a 67 per cent increase in its interest charge to pounds 97m because of a special dividend to shareholders in September 1997.

BT, which will get $7bn later for selling its 20 per cent stake in MCI to WorldCom, has shareholder approval to buy back up to 10 per cent of its shares.

However, other investments and acquisitions will be a priority.