An alliance between AT&T Corp and British Telecommun-ications Plc called Concert, which sells phone service to businesses, has stopped hiring and transferring employees to the company to cut costs while the partners discuss how to continue the joint venture.
"We have frozen all hiring," said Jennifer Kennedy, a spokeswoman for Concert in Hong Kong. "Concert is not taking on any employees, and that includes those from AT&T and BT." The venture, which employs 6,800 people and froze hiring this month, has fallen short of revenue goals since it was formed in 1998. British Telecom has said Concert hasn't performed as expected and it's in regular talks with AT&T to examine its options in the partnership.
Earlier, Business Week reported on its Web site that AT&T is close to taking control of Concert. An announcement may be made as early as next month, the magazine said, citing people inside and outside the companies. AT&T also is looking to buy Ignite, British Telecom's provider of high-speed Internet access, it said.
"We are continuing to talk with BT, looking for ways to strengthen the partnership, but we're not going to speculate on what the outcome of those discussions might be," AT&T spokesman Dan Lawler said.
Although British Telecom also said they are in talks about the venture, both companies declined to provide further details.
"This once again reinforces that joint ventures are difficult to make successful and it seems the aims and ambitions of the two partners are rather divergent," said John Tysoe, an analyst at WestLB Panmure. He has a "hold" recommendation on British Telecom.
AT&T and British Telecom have invested more than US$1 billion in Concert's first year to build its network and planned to invest US$3 billion over next five years to meet customer needs, according to Concert's Web site.
British Telecom said in February Concert, which offers phone, data and Internet services to large businesses, had third-quarter operating profit before goodwill amortization and one-time items of ?2 million.
Last year, AT&T and British Telecom said they expected Concert to have revenue of US$7 billion and earnings before interest and taxes of US$700 million in 2000. That's 30 percent less than the US$10 billion in sales and US$1 billion in earnings they projected when Concert was unveiled.
BT shares rose 13 pence, or 2.2 percent, to 594 pence. AT&T fell US$0.29 to US$22.92.
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