The focus of talks between British Telecommunications and AT&T, of the US, has shifted to merging their business services divisions. The two companies have discussed combining their mobile units as well but negotiations now involve only the business services arms. No formal plan has yet been agreed. Talks in recent weeks have been between top executives from both groups, including Mr Michael Armstrong, chairman of AT&T, and Sir Peter Bonfield, chief executive of BT. Both companies are said to be equally interested in continuing discussions.

BT - which acquired Esat last January - and AT&T have already combined their international business services in a venture called Concert, set up at the beginning of this year. The companies would combine Concert with other units serving businesses into a company focused on the international market for Internet and data services.

Any combination would include Ignite, created by BT to handle its fast-growing international data services. AT&T received $14 billion of its $32 billion of revenues from business customers in the first six months this year. AT&T executives are likely to discuss a business combination with BT at a board meeting this week.

Such a move would leave the companies with their domestic consumer operations and their wireless businesses. The pair already have an existing alliance in mobile phones between BT's Cellnet and AT&T Wireless. By June, the combination had 48 million mobile subscribers in more than 15 countries. In the past 18 months, BT's debt has soared from next to nothing towards an estimated £28 billion sterling, preventing it from making any large acquisitions.

Mr Robert Brace, finance director, has set himself a target of raising £10 billion by the end of next year. To do this, the company is likely to offer part of its wireless assets on the stock market and sell minority stakes, which include Airtel in Spain. Investments in the Internet ventures Excite UK and LineOne will probably be sold.