MCI deal makes BT stock desirable

The proposed merger between British Telecom and MCI Communications has certainly pleased the UK investment community.

The proposed merger between British Telecom and MCI Communications has certainly pleased the UK investment community.

On the first day of trading after Sunday's announcement, BT's stock rose from 351 pence to 373.5 pence. By the close of trading yesterday, the price slipped back slightly to 371.5 pence, but the stock is definitely seen as one to buy by the investment advisers in London's financial district.

"The combination of BT and MCI will create a powerful new industry player, with a genuine opportunity to establish a leading position in the US and European markets," analyst Robert Millington says in a research document from BZW Research.

Before the deal was announced, BZW had been predicting annual growth of earnings per share for BT to rise by 3%. Now that forecast has been revised to 8% for the years ending March 1998 and March 1999.

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