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Concert is History, but BT Americas is Here to Stay
Josh Long
11/01/2005 BT Group plc is making a statement in North America, going head-to-head with AT&T Corp. and other U.S. phone titans for the IT and networking business of global multinational firms operating in Western Europe. Some analysts say the strategy is working. “I think they’re doing quite well,” says David Neil, a research vice president with Gartner Inc. With a targeted approach in North America, the U.K.-based telco has landed some key accounts here, including a multiyear contract to manage the local and wide area network infrastructure of pharmaceutical giant Bristol-Myers Squibb Co. Analysts say BT’s strengths lie in delivering global IT and network services to U.S. companies with significant operations in the United Kingdom and other parts of Western Europe. BT will go head-to-head with AT&T Corp., MCI Inc., and, to a lesser extent, Sprint Corp., for the business of multinational firms spending at least 30 percent of their telecommunications budget outside the United States, says Brownlee Thomas, a principal analyst of global telecom services with Forrester Research Inc. “A significant portion of that [business] would be in Western Europe or the U.K.,” she says. BT is no stranger to the U.S. market. It had a partnership with MCI (which it also at one point had planned to merge with, before that deal fell apart) in the 1990s before teaming up with AT&T to form Concert, a money-losing joint venture that was dissolved in 2002. Thomas says the end of the joint venture left hundreds of large companies with two contracts: one from BT, another from Old Ma Bell. “Customers were not thrilled about it,” she says, “believe me.” Chuck Pol, president and COO of BT Americas, concedes many customers were disappointed about the failed joint venture, but he says BT began establishing some credibility during the first year following the breakup of Concert. And in 2003, BT decided to penetrate further into the North American market, expanding its IP network in the United States from eight cities to 23. That same year, BT landed a five-year deal with Honeywell, the U.S.-based technology and manufacturing conglomerate, to provide network services to 220 Honeywell sites throughout Western Europe. More recently, BT has made some acquisitions to bolster its global networking and IT business. Earlier this year, it acquired California-based Infonet Services Corp., a global managed network service provider. BT renamed the company BT Infonet. The deal brought BT about 1,800 customers. BT also has acquired New York-based Radianz, a company providing extranet services to the financial services industry, from media giant Reuters. A huge bonus: When BT announced the deal, it also disclosed landing a multiyear contract valued at an estimated $3 billion to provide and manage data networks for Reuters over eight-and-a-half years.
BT wants to be known as a global IT network services provider, and the moniker may be catching on. While revenue in BT’s traditional business in the United Kingdom is declining, the global services division -- of which BT Americas is a part -- has reported growth over five consecutive quarters. And in the quarter ending March 31, 2005, BT Global Services reported 17 percent growth year-over-year. Clearly, the United States is important for BT. Forty percent of the world’s multinationals are based here, and 1,300 of BT’s top 2,000 customers and prospective clients have significant operations in the United States, says Colin Spence, vice president of strategic marketing for BT Americas.
Zeroing in on the marriage of IT and network services will help BT win favor among multinational firms in North America, says Forrester Research’s Thomas, who doesn’t believe U.S. carriers have positioned themselves in such a way. “BT has been pushing this. … They have a track record,” she says. “AT&T can do this, but they’re not marketing it.” That doesn’t mean BT couldn’t do more to spread its image in North America. BT Americas has discovered that 73 percent of its target market is aware of the company, but Spence says the “number drops dramatically” when potential customers are asked about the scope of BT’s capabilities. “I think BT could probably do more to give themselves more visibility,” says Gartner’s Neil. AT&T Corp. www.att.com Analysts: BT Stronger than European Peers in North AmericaBT Group Plc is not the only European company selling telecommunications services to multinational firms in the United States, but some analysts say the U.K.-based telco has made more traction than its peers. Brownlee Thomas, a principal analyst of global telecom services with Forrester Research, says BT has more visibility in the United States than Deutsche Telekom and France Telecom. France Telecom, however, has grown its position in the U.S. market by purchasing the remaining stake in Equant, a global communications provider for multinational firms. Mack Treece, president of the Americas at Equant, says the company has a network reaching 220 countries and territories from the United States to India and China. “Equant’s full acquisition by France Telecom confirms the group’s commitment to the enterprise market and illustrates its strategy as an integrated operator providing services to customers worldwide,” says Michel Huet, president of France Telecom North America. “The North American market is certainly a priority for the group given the high concentration of U.S.-based multinational corporations.” Colin Spence, vice president of strategic marketing with BT Americas, says: “Clearly Equant is a major global player.” However, Spence doesn’t see T-Systems, a unit of Deutsche Telekom, doing much in the United States. “I don’t think T-Systems is making any impression at all,” he says. Elizabeth Stonequist, a spokeswoman for T-Systems, provided a generic comment about its North American strategy, saying: “We do pursue German multinationals as well as North America companies that fit our target.” Thomas says T-Systems is “really just servicing German-based” companies in the United States, but another researcher notes Deutsche Telekom is seeking to grow its operations. “They’re not as strong in the U.S., although they definitely are trying to increase their visibility and coverage,” says David Neil, a research vice president with Gartner Inc. “I think potentially, given time, they could do well.” BT Group plc www.bt.com
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