Cable & Wireless, BT in merger talks

Cable & Wireless and British Telecom, the UK's largest telecommunications providers, are currently in exploratory discussions about a possible merger, according to a statement released to the stock exchange last week.

If the merger goes through, the combined revenue of the two companies would be 19 billion pounds sterling ($38.5 billion), making it one of the largest telecommunications operators in the world.

However, according to analysts, the merger would bring with it a string of regulatory and practical difficulties.

"C&W would have to sell off Mercury Communications PLC to avoid being slammed by the Monopolies and Mergers Commission," said Olivia Gibney, a senior analyst with Romtec, an independent research firm.

"AT&T have been rumoured to be interested in Mercury Communications," she added.

C&W is an attractive proposition for British Telecom because the company owns 57 per cent of Hong Kong Telecom, according to John Mathews, principal consultant for London-based consultancy Ovum.

"BT desperately need a presence in Asia for the MCI and BT Concert Network," said Matthews.

Neither company would discuss the merger.

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