Outlook: Brown shows Bonfield the way

Outlook on the proposed solution to the problem of sets, the risk of a global stock market crash, and the contrasting fortunes of BT and C&W

FOR A guide to the difference between British Telecom and Cable & Wireless, the last few weeks are a pretty good illustration. While Sir Peter Bonfield, BT's chief executive, was last week telling the world that he was keeping his options open on possible deals in the US his counterpart at C&W, Dick Brown, was locked in a room with executives from MCI, convincing them to sell him their Internet business.

It was all supposed to be so different. Back in July1996, when Mr Brown took charge and Mr Bonfield was just getting his feet under the desk, the roles were reversed. C&W, which had just failed to merge with BT, was a floundering mish-mash of unrelated telecom businesses without a strategy and, so the market thought, an independent future.

Meanwhile, Mr Bonfield was the dynamic type who could shake the last cobwebs of state ownership out of BT and turn it into a world-beating telecom giant.

But the reverse has happened. Mr Brown has beaten some shape into C&W, selling off assets where it has no management control and signing deals with the likes of Telecom Italia while instilling a fast-moving, entrepreneurial management culture.

At the same time, he has also presided over a long-needed rationalisation of the cable industry which gives Mercury a new lease of life.

Meanwhile, Mr Bonfield has done a lot of talking about international strategy but watched his planned mega-merger - with MCI - fall apart.

So when MCI called both BT and C&W three weeks ago to ask them whether they were interested in buying the Internet business it was Mr Brown who had the deal almost sewn up before BT knew what was going on.

Ironically, radically different management styles have had precious little effect on share price performance. Since July 1996, BT's shares have kept up with those of its smaller rival, partly out of relief that the MCI deal failed and partly in expectation that BT would be propelled into the mother of all payouts to shareholders.

Unless Mr Bonfield gets his act together soon, however, it's hard to see that share price performance lasting.

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