BT sees planned partner rise 21%

MCI Communications, the long- distance telephone company in which BT has agreed to buy a 20 per cent stake, yesterday reported a strong increase in operating profits for the second quarter, on the back of double-digit growth in telephone traffic.

MCI's net income was dollars 215m ( pounds 155m), compared with dollars 150m for the same period last year. Excluding a special charge in the same quarter a year ago, profits grew by 21 per cent. Total revenue rose to dollars 3.31bn from dollars 2.93bn last time.

MCI has been running an aggressive marketing campaign in the US for its 'Friends & Family' programme, which offers deep discounts to residential customers on a list of selected telephone numbers. At the corporate end of the market, MCI also signed a record number of contracts with large customers during the first half, including the renewal of a worldwide deal with the Holiday Inn hotel chain worth dollars 153m over four years.

'The driving force behind MCI's performance is strong growth in our core business,' Gerald Taylor, president of MCI, said. He pointed to the company's success in attracting large corporate accounts, small and medium-sized businesses and residential customers.

Last year, BT agreed to pay dollars 4.3bn for a 20 per cent stake in the group, and the deal is expected to clear its final regulatory hurdles within the next few months. The alliance between MCI and BT puts both companies in a strong position to win contracts with multinational corporations that want all their telephone and data transmission services managed under a single contract.

Big telephone companies around the world are chasing this business, and MCI and BT plan to combine their resources to offer a global service known as Concert. Glaxo and BP are two BT customers expected to be among the first to sign up for Concert.