Magazine article Marketing

BT Talking Telephone Numbers

Magazine article Marketing

BT Talking Telephone Numbers

Article excerpt

As BT talks with Cable and Wireless about merging to form a global telecoms giant, Sharon Marshall investigates the possible benefits for British business and consumers

You have to admire the sheer chutzpah of BT. For years it has been saying how important competition is to the market. Now it has turned around and announced it's good to talk with fellow behemoth Cable and Wireless.

Evidently BT has decided that having some 90% of UK connections is not close enough to a monopoly for its liking. It is negotiating a deal which will take it one step closer to the total domination it originally enjoyed as part of the Post Office.

Both BT and C&W issued cautious statements last week confirming City rumours that date back to the 80s. The two are discussing a merger which will be the biggest in British corporate history and make BT a [pounds]35bn global telecoms giant.

Analysts have scoffed at merger talks in the past, but according to one: "The odds have shifted in the past couple of weeks and it looks more likely to go ahead."

Government approval

Strangely, there appears to be little opposition to BT pursuing its merger dreams. BT shares, which have slumped this year following hostile action by regulators Oftel, surged as news of the merger talks spread. The Department of Trade and Industry is also supportive of the creation of a British national champion in the global telecommunications field.

And although it was the threat of competition that woke up BT to the need to market itself more effectively to woo consumers, it is arguable that its quest for world domination could also benefit UK consumers.

The main prize for BT in this merger will be C&W's 57.5% stake in the Asian giant Hong Kong Telecom. With HKTel, BT would inherit both C&W's main profit centre and leadership in the fast growing Asia-Pacific market.

As BT becomes less dependent on the British market it should, theoretically, end its increasingly high-profile squabbles with the regulator. Ending the need for astonishingly high profits in the UK should make BT more willing to offer better deals and lower prices. It should also open up the UK market to competition from firms such as cable companies with the potential to create more choice for customers.

Mercury's future

The second benefit would come from Mercury. Competition legislation would force C&W to sell off its 80% stake in its Mercury subsidiary, which is BT's main rival in the UK. …

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