MCI push into local market set to continue

British Telecom's US partner, MCI, yesterday pledged to press ahead with its costly expansion into the $100bn (pounds 61bn) local American phone market, regardless of the outcome of the joint review into the group's strategy launched by the two companies.

Doug Maine, MCI's finance director, insisted the drive into local phone markets remained the company's top priority. "MCI is never slow to seize the opportunity. Now is exactly the time to make our move," he said.

The upbeat message came as the US carrier confirmed a drop in earnings in the second quarter of the year, a fortnight after the shock profits warning which threw the $20bn merger with BT into jeopardy. Profits between April and June dropped by 6.7 per cent, to $280m after tax, while the local operations lost $61m.

MCI's huge investment programme in the local market accelerated further, with $970m spent in the second quarter, compared with $900m during the same period the year before. Mr Maine said the programme was "pure MCI", making "short-term investment to ensure long-term success".

He also angered British analysts and investors by discounting an early conclusion to the review, suggesting the findings would emerge in "weeks rather than months". The comments met with surprise from institutional shareholders last night, who had expected an announcement much sooner.

James Dodd, telecoms analyst with Dresdner Kleinwort Benson, said most shareholders were hoping for news "within days". He added: "The senior management at BT and MCI should have been focused on these problems since the deal was announced last year, not getting to grips with them now."

One institutional investor described BT's handling of the affair as "abysmal". The shareholder continued: "The only time we've had contact with BT is when we've asked for it. They say it's good to talk but they're not doing it."

The institution added: "BT's management now has a serious credibility problem. MCI is telling its investors in the US that the merger terms can't be renegotiated. We'd like some answers from BT now."

The MCI figures also showed a worrying slowdown in growth in its core long-distance phone business, previously the main driver of profits. Sales from long-distance calls rose by 4.7 per cent to $4.4bn in the second quarter, compared with a rise of 12 per cent last year.

Mr Maine warned that long-distance growth for 1997 would be flat, as the regional phone companies began attacking MCI's traditional territory for the first time.

BT will today report a small drop in profits for the same three-month period, to around pounds 850m, as the impact of regulatory price cuts continues to bite.

Arts and Entertainment
Eye of the beholder? 'Concrete lasagne' Preston bus station
architectureWhich monstrosities should be nominated for the Dead Prize?
Lizards, such as Iguanas (pictured), have a unique pattern of tissue growth
Anna Nicole Smith died of an accidental overdose in 2007
Life and Style
food + drink
Arts and Entertainment
'The Great British Bake Off' showcases food at its most sumptuous
tvReview: Bread-making skills of the Bake Off hopefuls put to the test
ebooksAn evocation of the conflict through the eyes of those who lived through it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Quantitative Analyst (Financial Services, Graduate, SQL, VBA)

£45000 per annum: Harrington Starr: Quantitative Analyst (Financial Services, ...

Application Support Engineer (C++, .NET, VB, Perl, Bash, SQL)

Negotiable: Harrington Starr: Application Support Engineer (C++, .NET, VB, Per...

AIFMD Business Analyst / Consultant - Investment Management

£450 - £600 per day: Harrington Starr: AIFMD Business Analyst / Consultant - I...

Business Analyst Solvency II SME (Pillar 1, 2 & 3) Insurance

£450 - £600 per day: Harrington Starr: Business Analyst Solvency II SME (Pilla...

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home