BT close to completion of MCI buyout

British Telecommunications is expected to complete its acquisition of MCI Communications in the autumn, following the go-ahead from the US Justice Department, but it must modify its agreement to ensure fair prices for consumers.

Before the $20 billion deal for the US telecoms giant goes through, a further seal of approval is also needed from the US Federal Communications Commission, although this is expected to be no more than a formality.

A BT representative said a consent decree signed between the two companies when BT took a 20 per cent stake in MCI in 1994 had been changed a year ago, but the US Justice Department required further changes to strengthen protection against a monopoly.

?We will still have to await FCC approval but this is just a question of being rubber- stamped. Approval is less to do with the legal situation and more to do with ensuring that we are not creating a giant monopoly,? he said.

But the merger was rocked last week when MCI issued a profit warning about its financial situation, estimating that it would lose $800 million. The company blamed its problems on the delays that prevented the opening up of the $100 billion US local telephone market to competition. The announcement dealt a severe blow to the planned acquisition.