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Telecom behemoths flirting with merger?

Executives at AT&T and British Telecom are having informal merger discussions, according to a report.

Executives at AT&T and British Telecom have held informal merger discussions in recent weeks, according to a report, though neither company would officially confirm such talks and no move was said to be imminent.

The two telecommunications behemoths have been longtime transatlantic partners, most recently in their Concert joint venture. Now they have held informal talks concerning a merger, according to a report in Wall Street Journal.

AT&T spokesman John Heath wouldn't comment on BT merger rumors, but sources said that some restructuring at AT&T is likely in the near future.

BT chief executive Peter Bonfield, meanwhile, said he is "very open-minded" about a possible merger, according to the Journal report.

AT&T chief executive Michael Armstrong has been particularly resistant to any merger with another large telecommunications company in the past, but AT&T's stock hit a 52-week low of $29.63 Aug. 8. In recent weeks, Armstrong has floated several ideas to reverse his company's stock slide, including a spinoff of what has been AT&T's core business, consumer long-distance.

The Concert joint venture provides voice service to more than 280 countries and territories. The venture also owns nearly 47,000 miles of fiber, much of it under the Atlantic. Concert controls an international Internet backbone with more than 800 points of presence (POPs).

The regulatory approval of Concert took more than a year, meeting the European Union's approval after eight months, followed by approval from the Department of Justice and the Federal Communications Commission. Much stricter scrutiny would be expected, particularly in the United States, should AT&T and BT formally merge.

If AT&T were to join with BT it would likely be spurred on by a stock plummet of more than 35 percent in the last six months--a market value of about $115 billion. AT&T is worth only slightly more than it spent acquiring cable operators Tele-Communications Inc. and MediaOne.