More mergers in the works?

The industry was buzzing last week about four carriers rumored to be discussing mergers, buyouts and acquisitions.

The week began with reports that British Telecom, recently jilted by MCI in favor of WorldCom, was talking to GTE. Both companies refused to comment, but analysts speculated that such a move would not be bad for BT.

"Culturally, those two are much closer than BT and MCI were," said Jeff Phillips, a broadband consultant with TeleChoice. "GTE is the more aggressive and entrepreneurial of the [local incumbent carriers]."

If BT were to merge with GTE, both could benefit, Phillips added. BT would have an entree into the U.S. market without building its own networks, which was its main attraction to MCI.

GTE would gain an international presence that few Bell regional holding companies could match.

"BT would also bring to the table a large influx of cash, allowing GTE to rapidly expand into some major metropolitan areas," Phillips said. "Until now, it has tended to stay in second-tier, alternate cities."

Late last week, rumors also rose that SBC Communications and AT&T are talking again.

Earlier this year, the two began preliminary merger discussions but broke off the talks following vehement criticism of an alliance between the former Ma Bell and one of its spun-off RHCs. Critics said such a merger raised anti-competitive and legal issues and would violate the spirit of the 1996 Telecommunications Act.

The rumor comes just five weeks after AT&T named C. Michael Armstrong as its new chief executive. Armstrong has already met with members of Congress, the Federal Communications Commission and the Clinton Administration. Both AT&T and SBC refused comment.

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