By Anthony O. Goriainoff
Verizon Communications and BT Group said they would merge their international enterprise operations to form a joint venture, turning to a partnership to provide connectivity services to thousands of clients across several countries.
The two companies said in a joint statement that they had signed an agreement to set up the joint venture, in which both groups will have equal voting rights. The joint venture is expected to serve over 3,000 clients in more than 180 countries, representing roughly $4 billion in combined annual revenue.
The deal would allow Verizon and BT to tap each other's networking infrastructure and scale to serve customers internationally, relieving their respective businesses and making it easier for the companies to focus on their domestic markets.
BT CEO Allison Kirkby said the partnership marked a major step forward for BT's plans as the company seeks to focus more on the U.K. market. Verizon agreed to pay BT $625 million to balance out disparities in value, ownership, or tax burdens in the joint venture.
The companies said telecom industry veteran Martijn Blanken had been appointed as CEO-designate of the new joint venture. Blanken has nearly three decades of experience in senior leadership roles across telecommunications, technology and digital infrastructure at Telstra, Openwave Systems, EXA Infrastructure and KPN.
BT said its international division would be classified as a discontinued operation and was cutting guidance for the fiscal year through March 2027 to reflect that.
BT said it expects adjusted revenue between 17.1 billion and 17.6 billion pounds ($22.58 billion-$23.24 billion) compared with a prior range of 19 billion to 19.5 billion pounds. Adjusted earnings before interest, taxes, depreciation and amortization--a closely watched profitability measure--are now expected between 8.1 billion and 8.2 billion pounds compared with 8.2 billion to 8.3 billion pounds previously.
The joint venture is expected to be completed next year, subject to regulatory clearances and other closing conditions.
Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com