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Telecommunications industry

British Telecom Considers $4 Billion Acquisition of IBM's Internet and Telephone System

Strategic Insights

— 1 min read

British Telecom (BT) is pondering a $4 billion purchase of IBM's Global Network division, a move aimed at establishing the company as a direct competitor to WorldCom and MCI in the US market. The Global Network division generates $2 billion in annual revenues and provides phone and data services to 30,000 corporate customers. This potential acquisition comes as BT seeks to strengthen its position in the burgeoning telecoms market, where WorldCom and MCI, now a merged entity, hold a dominant position.

Key Takeaways:

  • BT is considering acquiring IBM's Global Network division for $4 billion (Pounds 2.4 billion) to enter the US market as a direct competitor to WorldCom and MCI.
  • The Global Network division has $2 billion in annual revenues and serves 30,000 corporate customers.
  • IBM is seeking buyers for the division, which may also attract other telecoms companies, including Cable & Wireless.
  • BT previously allied with AT&T to combat the $40 billion WorldCom-MCI merger.
  • IBM is expected to maintain the cable network at a cost of $200 million per year.
  • The sale is part of IBM's streamlining efforts after recovery in its main computer business.

Statistics:

  • $4 billion (Pounds 2.4 billion) - potential acquisition price of IBM's Global Network division
  • $2 billion - annual revenues generated by IBM's Global Network division
  • 30,000 - number of corporate customers served by IBM's Global Network division
  • $200 million - annual maintenance cost of the cable network
  • $40 billion - value of the WorldCom-MCI merger
  • $40 billion - value of the WorldCom-MCI link-up

Sources:

  • The Times, 1998
  • Copyright (C) The Times, 1998

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