BT and AT&T have agreed on how they will break up failed joint venture Concert, at a cost of around £5bn.

The split will cost BT about £1.2bn ($1.7bn) and AT&T £3.7bn ($5.3bn), the firms said. Some 2300 of Concert's 6300 staff will lose their jobs, including 800 to 1000 in the UK. Concert is expected to lose around £550m this year, with the break-up scheduled for completion in the first half of 2002.

Customers already have contracts with BT and/or AT&T as well as Concert, and their agreements will revert to the relevant parent company.

Sir Peter Bonfield, chief executive at BT, said: "Since Concert was conceived the international market has changed out of all recognition. And we need to change with it."

Chairman Sir Christopher Bland added: "I am glad we have regained control of our own destiny in the provision of services to international customers."

Under the deal, BT's interests in AT&T and a Canadian joint venture go to the US telco, along with Concert's Asia Pacific network. BT acquires Concert's managed services network infrastructure in Europe, Middle East & Africa and the Americas, and will employ around 2100 Concert staff.

The telco expects to return its part of the unit to profitability by 2003, subject to renegotiating existing agreements, consolidating brands, channels and products, rescaling network and operating functions and realigning its corporate sales unit.

Analysts said that BT's share of the business was losing money and didn't look attractive, adding that the multinational market would have to recover for BT to make it profitable.

Concert, which first reduced revenue targets just two months after receiving regulatory approval, suffered from lack of management direction and from being asked to compete against divisions of both BT and AT&T, experts said.