BT confirms merger talks with AT&T

BT has finally confirmed that it is in discussions with US giant AT&T over a possible merger of their business services.

The telco said it has been engaged in a major strategic review during the past year, which "naturally includes continuing discussions with AT&T".

BT's announcement follows months of speculation that the two telco giants are to merge. Last month it was reported that C Michael Armstrong, AT&T's chairman, and BT chief executive Sir Peter Bonfield held discussions about exploring a possible tie-up between the two companies, but BT dismissed the claim as "pure speculation".

However, in a statement issued on Sunday, BT admitted it is in continuing discussions with the US telco, which "include exploring ways of broadening and strengthening the scope of the relationship" between the companies in "business services". BT said the talks "may or may not lead to any change in the existing alliance arrangements".

BT and AT&T are already partners, through their joint venture company Concert, the international communications provider for multinational business customers, international carriers and service providers set up in January this year. According to newspaper reports, the companies will combine Concert with other units serving the corporate sector to form a company focused on the global market for internet and data services.

The two companies are also partners in the wireless alliance, Advance. BT said it will make a "further announcement later this year" on the review, as well as whether it plans to float parts of the business through initial public offerings.