Analysts predict faltering Unisource after AT&T pull-out

Unisource - a pan-European telecoms alliance - faces a struggle to keep hold of its multinational customers following AT&T's deal with BT, analysts claim.

AT&T and BT said they will combine their international operations in a move which they claim will deliver $10bn in combined revenues. As a result of the alliance, AT&T has said it will quit its joint venture with Unisource by July 2000.

Steve Wallage, telecoms analyst at Dataquest, commented: "To maintain its credibility with Global 1000 companies, Unisource has to find another partner fast. But there is no obvious partner of AT&T's stature, and it risks losing business."

Unisource, which is backed by KPN of the Netherlands, Telia of Sweden, and Swisscom, has put a brave face on AT&T's defection. Company spokesman, Cees Steijger, told Silicon: "Unisource has been doing more than just working with AT&T. Our joint activity with them is 60 per cent owned by us and 40 per cent AT&T-owned. But AT&T only contributed to some 20 per cent of Unisource's overall revenue."

Steijger did not give further details on Unisource's future plans, which the company had earlier called "the implementation of alternative scenarios which secure the continuation of serving large multinational corporations". He did say that main services to multinationals will continue uninterrupted.

Dataquest's Wallage said: "It is possible that Unisource could be looking at the Cable & Wireless/Telecom Italia pairing - but that wouldn't give it the same clout. Some Unisource members have invested heavily in overseas markets, but they may soon come to think it's time to get out. That would be a problem when it comes to keeping hold of multinationals based in their home markets."

A partnership between AT&T and Telecom Italia has floundered in recent months, but Unisource has maintained that the Italian operator could still join it.

Shares in KPN fell 6.8 per cent on Monday, on fears that the national carrier will lose out internationally with Unisource, while continuing to see its domestic market share eroded.