BT/MCI deal suffers further delay

British Telecom (BT) is re-evaluating its merger with MCI in a move which should plunge the deal into another month of uncertainty. The review was initiated following an MCI profit warning last month and is expected to take a further look at the combined local and long distance business of the two companies and that includes joint intranet services.

BT, which has just announced sound first quarter results has, according to sources, been under some pressure from investors to reduce its offer for MCI. The review, the sources suggested, is one way in which BT can find areas of MCI with which it is unhappy and therefore demand a re-negotiation of the merger fee.

The review is not expected to knock a hole in the deal and BT certainly won't drop MCI, a company in which it is already a 20 per cent stakeholder.

BT chief executive Sir Peter Bonfield described the review as "a broad, overall examination of the whole area, including the merger contract," but added that this was mainly because the agreement is "very large and complex."

BT's results for the first quarter to June 30, 1997 included a 2.4 per cent increase in profits to £891 million. Group turnover rose by 4.3 per cent to £3,798 million. The main growth in turnover came from advanced services, private circuits, mobile communications, exchange line rentals and interconnect receipts from other UK operators.

BT's advanced services' turnover nearly doubled over the previous year due to an increased demand for private circuits used for the Internet and intranets, according to the company.