Outlook: Hope springs eternal for BT's strategy

Huge amounts of time, energy and emotion have been invested by the BT board on bringing about the MCI merger. It is hard to exaggerate how serious a setback the WorldCom counter bid has been - the type of thing executives find it difficult to bounce back from. If Sir Iain Vallance and his chief executive at BT, Sir Peter Bonfield, have got a plan B for realising their global ambitions, there is no indication of what it might be; the stunned silence emanating from BT's Newgate Street headquarters over the past two days rather suggests that they don't. Everything seems to have rested on MCI. Without it, BT may have to reconcile itself to its present role as just another low-level national telecoms utility.

Hope springs eternal, however, and for the time being the strategy seems to be to turn a blind eye to reality and insist that there is still some chance of pulling off the MCI deal. This line of reasoning rests largely on the assumption that MCI shareholders will think a bird in the hand worth two in the bush. BT's cash and shares bid is there on the table having finally cleared all regulatory obstacles. By contrast, WorldCom's all paper offer is at least six months off and more likely a lot longer.

Moreover, as our story on page 23 explains, WorldCom is a creature of Salomon Brothers, the Wall Street investment bank, and largely its creation. With its hectic series of acquisitions, WorldCom has become a finely tuned fee earning machine for Salomon's, so much so that it is reasonable to suspect that this is actually its purpose. Add to that the huge arbitrage position Salomon Brothers was running on the BT/MCI transaction, on which it stood to make a substantial loss, and the real substance and purpose of this offer in highly rated WorldCom shares begins to look very questionable.

Trouble is, that though these arguments might look a runner from this side of the Atlantic, they are so much junk mail in the highly charged, ethylene driven, never never world inhabited by Wall Street investors these days. On Wall Street the choice is between one of the US's greatest ever growth stocks, and a bog standard, low growth European utility. From the sober and considered environment of the City of London (no joke intended), it is as plain as a pike staff that WorldCom's bid for MCI is a classic and foolish top of the bull market transaction. Unfortunately, for BT, this is as unobvious to US investors as the great speculative bubble of Wall Street itself. In the absence of a market crash, a plan B is rapidly going to have to wheeled out of whatever deep vault it has been hiding out in.

PROMOTED VIDEO
Life and Style
food + drink
Life and Style
Shoppers in Covent Garden, London, celebrate after they were the first to buy the iPhone 6, released yesterday
tech
News
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvSeries 5 opening episode attracts lowest ratings since drama began
Arts and Entertainment
Ben Affleck stars as prime suspect Nick Dunne in the film adaptation of Gone Girl
filmBen Affleck and Rosamund Pike excel in David Fincher's film, says Geoffrey Macnab
Life and Style
fashion
News
news
News
ebooksAn unforgettable anthology of contemporary reportage
News
people
Travel
Warner Bros released a mock-up of what the new Central Perk will look like
travel
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
News
i100
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

COO / Chief Operating Officer

£80 - 100k + Bonus: Guru Careers: A COO / Chief Operating Officer is needed to...

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments