BT confirms talks with AT&T

AT&T Corp. and British Telecommunications (BT) PLC are discussing potential deals that could expand on an existing business relationship between the two companies, according to a statement issued Sunday by BT.

The British telecommunications giant said it and AT&T are “exploring ways of broadening and strengthening the scope” of their business dealings beyond two previous agreements, under which the companies are partners in a wireless operation called Advance and a communications provider for multinational corporations called Concert.

The statement from BT comes a month after reports first surfaced that the top executives of the two companies had held informal conversations about the possibility of a merger. Meanwhile, AT&T’s board of directors is scheduled to hold a three-day series of meetings starting last Thursday at which it will consider the company’s future plans.

Despite BT’s statement, though, AT&T spokesman Jeff Roberts Monday declined to comment on what he described as “rumors in the media” about the talks between the two companies.

In its statement, BT said the talks with AT&T are part of an ongoing “major strategic review” being done by executives of the British company in an attempt to maximize shareholder value, increase operational effectiveness and improve customer service. The confirmation of the talks with AT&T follows a major reorganization announced in April in which BT created four new business units and made several management changes.

BT said it “intends to make a further announcement concerning the outcome of its strategic review later this year.” The company noted that the discussions with AT&T “are continuing and may or may not lead to any change in the existing alliance arrangements” between the two companies.

Although rumors of a possible marriage between the two telecommunications providers have been swirling around for the past several months, Tom Burnett, an analyst at Merger Insight in New York, said he doesn’t think a full-blown merger is in the cards.

“This will [most likely] be a commercial relationship” with expanded business ties, Burnett said. “The two companies may share assets … or even extend their Concert joint venture,” he added. “But I don’t think there will be any fireworks beyond that.”