AT&T Corp. said it will step up its collaboration with four European telephone companies, as the European Union prepares to open its telecommunications industry to competition from 1998.
AT&T and Unisource NV, a partnership between the dominant telephone companies in the Netherlands, Spain, Sweden and Switzerland, said they will merge almost all their operations to create a pan-European telecommunications company with annual sales of $1 billion and more than 5,000 staff.In addition, they plan to enter new markets, including France, Germany and Italy, by establishing joint ventures with new partners.
"The logical step now is to make this move," said Pier Carlo Falotti, executive vice president for AT&T's international activities, in an interview. "We want to make sure we have a network that allows us to deliver the same services worldwide."
The accord follows the approval of Phoenix, a joint venture among Deutsche Telekom AG, France Telecom and Sprint Communications Corp. of the U.S. to sell global telecommunications services to multinational customers. It also comes as British Telecommunications Plc ramps up its investment in joint ventures across Europe as part of its Concert joint venture with MCI Communications Corp. to serve multinationals. This month, BT added a joint venture with Berlusconi's Mediaset in Italy to ventures it has created in Spain, Germany, Scandinavia among others.
All three ventures, which are competing for international companies' global telecommunications budgets, are laying plans to capitalize on plans by European member states to open their telecommunications markets to full competition by 1998.
"We want to be able to offer a full range of integrated services in a more rapid way," said Falotti. He declined to say how much the companies will invest in Europe.
AT&T and Unisource will develop an advanced European tele communications network platform and introduce satellite and mobile services for the first time, said Falotti.
Unisource was formed in 1992 as a joint venture between Royal PTT Nederland NV, Swiss PTT Telecom and Sweden's Telia AB. Spain's Telefonica SA later joined. All four partners hold a 25 percent stake.
Only a few businesses, such as cable television operations and AT&T's calling card services, are excluded from the two new European ventures. The alliance also won't include domestic units of the four Unisource partners.
The agreement builds on a 1994 pact under which AT&T and Unisource created a company called Uniworld. Uniworld provides telecommunications services to large clients and is regarded as a testing ground for cooperation between AT&T and Unisource.
The first of the two new joint ventures, AT&T-Unisource Services, will be 60-percent owned by Unisource and 40-percent by AT&T. This venture will have two divisions.
Its communication services division will encompass all Uniworld operations and will be based in Hoofddorp, near Amsterdam, where Uniworld now resides.
AT&T and Unisource will set up a separate division, named Multimedia & Solutions, which will be headquartered in Geneva, Switzerland. This division will offer a range of internet and communications consultancy services.
The second venture will be an investment company called AT&T Unisource Investments that will be 50-percent owned by both AT&T and Unisource. This company plans to establish joint ventures with local companies as a way to penetrate key European markets in which they do not already have a presence.
Falotti said AT&T has already sealed an agreement with CNI of Germany and its partners Mannesmann AG and Deutsche Bank. He said the company has signed a letter of intent with Compagnie Generale des Eaux in France to set up a joint venture there. He said the company is in talks with Italian partners, but declined to name them.
In addition, Unisource will take a minority stake in AT&T's U.K. operations.