BT and AT&T announced on Wednesday that first year profit and revenue from their fledgling global joint venture, Concert, were now expected to be less than previously forecast.
But they said that the paperwork to complete the joint venture, which they have been working on for a year and a half, had now been signed. Concert provides voice, data and Internet services to multinational businesses, international carriers and Internet Service Providers (ISPs).
BT and AT&T now expect the firm's first year's turnover and profit to be 30 per cent lower than the $10 billion and $1 billion respectively that were initially forecast when the partnership was first revealed in July 1998.
The shortfall was blamed on a drop in fees for international calls due to increased competition, but Concert still hopes to earn $700 million, on sales of $7 billion.
About $5 billion of this revenue is expected to come from managed data, Internet Protocol (IP) services and transit and hub services for international customers. Another $2 billion per year should be generated by delivering traffic for its parent companies' international direct dial telephone business.
David Dorman, Concert's chief executive, was upbeat about the news, however.
"Concert is the only company with the means to deliver truly global services to customers by offering them reach, connectivity, flexibility and seamlessness in network services, applications and customer support. We have a great market opportunity ahead of us and fully intend to take advantage of it," he said.
Concert claims that its frame relay network reaches every major city in the US and UK, and 170 other cities in 47 countries, while its global public network reaches 237 countries directly.
It has also built its own IP backbone spanning 21 cities in 17 countries, which it is in the process of combining with the IP backbone that AT&T acquired from IBM a year ago. When integration is complete in 18 months' time, Concert's IP backbone will reach more than 60 cities worldwide.
BT and AT&T have already invested a combined $3 billion in Concert and will spend $1.5 billion more in 2000 to develop the IP Network.
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