BT and AT&T announced today that they have formally agreed
terms on which to disband their Concert Communications joint
venture and return the assets to the parent companies.
AT&T said it would take a $5.3bn (£3.7bn) charge against its
third-quarter earnings, largely as a result of the demerger
agreement. BT will take a £1.2bn charge against its third-quarter
earnings, and also plans to divest its stake in AT&T's Canadian
subsidiary.
Up to 2,300 jobs will be lost as a result of the demerger, the
companies said. The remainder of the 6,300-strong Concert workforce
is expected to be absorbed into BT and AT&T.
AT&T cited overcapacity and a sharp drop in telecoms prices
that dragged down revenue as reasons for the decision to disband
the venture. Concert was not helped by the fact that many emerging
carriers, who had been expected to become customers and suppliers,
had encountered financial difficulties.
The demerger agreement is expected to close in the first half of
2002, and AT&T and BT will work together to provide a smooth
transition for Concert customers. All existing contracts and
service level agreements will be honoured for three years,
according to a joint statement.
Under the terms of the agreement, BT and AT&T will re-assume
control of the assets each had contributed to the joint venture,
including customer contracts, international transport facilities
and gateways. The exception to this agreement is a frame relay
network in Asia-Pacific, originally contributed to Concert by BT,
which AT&T will take over.