BT expects layoffs in Concert decision

British Telecom expects to reach a decision regarding the break up of Concert Communications - its joint venture with AT&T - by...

British Telecom expects to reach a decision regarding the break up of Concert Communications - its joint venture with AT&T - by the end of the year.

Peter Bonfield, BT's chief executive, said that any restructuring costs - including cash and non-cash costs - would be "substantial", as would the resulting employee layoffs at Concert.

BT's finance director, Philip Hampton, added that if BT and AT&T were to close down the joint venture, it would be unlikely that BT would write off the entire £1.4bn book value of its stake in Concert. He indicated that a more likely figure would be £500m.

Concert currently employes 5,900 people worldwide, with £4.8bn in annual revenue, BT spokesman Michael Widley confirmed. Widley declined to speculate on just how many people at Concert were facing potential job losses.

When it came to Concert customers, Widley asserted that they would continue to receive uninterrupted services, and that BT would want to retain the customers it had when the joint venture was launched in 2000. "There are a number of different permutations, but nothing has been decided as of yet," he said.

Concert's customer base includes multinational companies, traditional and emerging carriers, wholesalers and Internet service providers (ISPs). BT and AT&T contributed about 207 customers each to Concert at the time of its launch, according to a Concert spokesman, who would not offer any other comment on the situation.

AT&T said that "despite ongoing media speculation, no decision has been reached", and that the company could not predict the future outcome for Concert.

"The three companies are working together to ensure that customers receive continuous, uninterrupted global communications services, both during the discussion period and throughout the execution of any decisions that are agreed," said AT&T spokesman Phil Coathup.

"Any decisions made will be based on the best interests of customers, shareholders and employees. Whatever decision is made, AT&T's presence in Europe will continue and our commitment to serving the global communication needs of multinational customers - especially those based in, or with significant operations in EMEA [Europe, Middle East and Asia] - remains undiminished," Coathup added.

In April, AT&T said in its report for the first quarter of 2001 that Concert had lost $122m (£83.2m) due to lower revenue, higher network costs and bad debt. Some reports estimate that Concert is currently losing £20m per week.

Speculation about the future of Concert has been going on for months as the talks over the dissolution of Concert continue to be drawn out by BT and AT&T.

Concert lost £81m for its first fiscal 2001/2002 quarter, which ended on 30 June. Owing to a weak wireless market and international competition, Concert had to reduce its pricing while its network capacity utilisation remained low, BT said at the time.

The losses incurred by Concert are making a difficult financial situation worse for BT, which plans to reduce its $38.5bn (£26.3bn) debt by more than £9bn ($14bn) before the end of the year. A large part of that plan involves spinning off BT Wireless as its own company.

The November spin-off of BT's renamed wireless division MMO 2 has been largely overshadowed by the questions concerning Concert.

David Varney, the chairman of MMO 2, said the company expects to spend £8.3bn on 3G mobile technology over the next five years. BT spends £10bn alone on obtaining the licences for the next generation services.

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