British Telecommunications Plc, owner of Esat Digifone, said yesterday that sorting out its loss-making Concert global network joint venture with AT&T Corp was a priority.
BT, engaged in a major restructuring that includes plans to demerge mobile phone arm BT Wireless, has been in talks with AT&T for some time regarding Concert. A BT spokeswoman said a range of options was being discussed, including BT pulling out of the venture, but it was premature to say more at this point. "We're talking to AT&T as a matter of priority to resolve the situation," she said.
The 50/50 venture was set up to provide telecoms services to the world's biggest multinational companies. However, BT last month reported a loss of £81 million pounds sterling (€129 million) for its share of the venture in the first quarter of its current financial year.
Media reports said BT was preparing to write off its entire investment in Concert, estimated at £1.2 billion. The reports said the write-downs could mean a major one-off loss for BT, along with hundreds of job losses, as Concert employ about 6,000 staff worldwide. It could also mean large write-downs for AT&T.
An announcement on the write-offs may come in the next few weeks. The BT spokeswoman said the company could not comment on speculation on the timing or the write-offs, but said resolving the future of Concert was a priority.
Reports said the situation was likely to be resolved before the demerger of BT's mobile phone division, expected to get underway later this year after a shareholder meeting in October or November.
In July, BT reported a 70 per cent fall in underlying first quarter profits due to interest on debts and losses at the wireless division which has been earmarked for demerger. BT has been tackling its debt mountain, cutting the figure to £17.5 billion from £27.9 billion in the first quarter.
The company's aim is to reduce this to £15 billion, partly by selling off property and through other disposals. The company also tapped shareholders for a mammoth £5.9 billion earlier this year in a rights issue as part of the restructuring.
Vodafone is discussing ways to improve operating performance at Japan's second largest mobile phone operator, J-Phone, ahead of a likely move to take direct control of the firm. Vodafone, the majority shareholder, acquired stakes of 5 per cent in each of J-Phone's three operating companies from BT, and helped finance the acquisition of BT's 20 per cent stakes in JT and J-Phone through a £3.5 billion share placing.
