By the middle of this year, British Telecom expects to exercise its right to buy out MCI's stake in the two companies' Concert PLC joint venture, the CEO of BT says.
In addition, BT's Peter Bonfield says he will not step down from his post as CEO in response to BT's failed merger attempt with MCI. Late last year WorldCom wrenched MCI away from BT with a surprise bid of US$36 billion.
Bonfield says he personally has no plans to step down nor are BT shareholders calling for his resignation, as some industry rumors had suggested.
"There is no need for me to take the fall," he says. "What we've done is increase the shareholder value of BT significantly."
"Since I've joined BT, I think the share price has gone up by more than 60%, so none of the shareholders are asking me to stand down."
The failure of BT’s bid for MCI is, in part, blamed on the British carrier's lowering of its initial offer price following an announcement last year that MCI’s earnings would not meet expectations. The lower bid price opened the door for WorldCom to step in with its offer, the largest in US corporate history.
"[Shareholders] would have been very upset with us if we had closed MCI at a high price," Bonfield says. "To get in there and renegotiate the price when their [MCI’s] profit warning came out was the right thing to do. If that opened it up for someone else to make a higher bid, then that was fine. We chose not to push the price up."
Following the US government's approval of the WorldCom-MCI merger, BT will buy from MCI the 25% stake it holds in the companies' Concert joint venture, Bonfield says.
"We have essentially a call option on the 25% controlled by MCI, so once MCI and WorldCom get together probably the middle of the year, then we'll exercise the call," he says. He says BT and MCI will continue to support each other's customers, despite the buyout.
Over time, Bonfield expects that the newly-created company, to be called MCI WorldCom, will slowly migrate MCI’s customers onto its own network.
"We imagine what will happen is they will move some of their products on the combined MCI WorldCom network over a period of time, but in between time they'll use Concert."
BT can be reached in London at +44-171-356-5000 or at http://www.bt.com/.