The present world of telecommunications is fast-moving, amorphous and unpredictable. British Telecommunications (BT) had recognized the importance of developing an aggressive, world-wide marketing strategy in such an environment when it contemplated a purchase of MCI.
BT bought a 20% stake in MCI in 1993. In November of 1996, BT attempted to consummate the relationship with a $24 billion bid for the 80% of MCI it did not own. This bid was reduced to $19 billion in July of 1997 when MCI revealed large losses in the U.S. local telephone market.
When the BT-MCI union was first proposed, it was suggested by many analysts that while BT might be a touch staid and slow-moving, MCI, as the maverick among phone companies, was just the ingredient to add zest to the BT culture primarily because of its innovative marketing experience, learned while taking on AT&T.
In the first two weeks of October 1997 this proposition appears to have been stood on its head. In the US context, the new Worldcom Inc.'s unsolicited $30 billion takeover bid for MCI makes MCI seem slightly old and tired, and sufficiently shaken by the pace of change to have sought some refuge in BTs embrace.
But the consequences of the WorldCom takeover bid for MCI is equally momentous for BT. BT management, assuming that the MCI union was a done deal, had formulated a general marketing strategy that included three new ingredients: a focus on the European marketplace, seeing itself as well-positioned for that once-in-a-life-time opportunity; an increased push, with the help of MCI, into the evolving and relatively high-growth multinational global network business; and greater penetration of the U.S. market, through MCI's access to the local loop, due to FCC liberalization (Donlon, 1997). If the WorldCom bid were to succeed as announced, the hole in BT's world-wide strategy would be cavernous.
The analysis which follows will first detail the specific marketing...