Gazette about its negotiations with the Bermuda Telephone Co. Ltd. (BTC) by calling the report "inaccurate and totally speculative''.

The company called on the newspaper to retract the story and make a statement to the effect that any statements "concerning negotiations involving a joint venture or any equity purchase or sale arrangement between TBI and BTC are contrary to TBI's express statements to the paper and are not attributable to TBI''.

However, The Royal Gazette stands by the accuracy of its story and the statements attributed to TBI spokesman Ken Spurling who was quoted as saying: "We (TBI and BTC) have had productive meetings. There are a number of initiatives being taken in order to improve services domestically and internationally.'' In a further interview, Mr. Spurling subsequently told the newspaper the statements attributed to him were accurate. He added TBI was also in discussions with Quantum Communications Ltd. regarding services to customers the two companies had in common. Quantum is about to compete with BTC in the local telephone market.

The press release also said TBI in in "constant discussions aimed at facilitating improved systems interaction and delivery'' with BTC, Quantum and Cable & Wireless.

Royal Gazette Assistant Editor Bill Zuill said the story made it quite clear the discusssions were not about an equity purchase or merger.

" The Royal Gazette stands by its story, which makes it quite clear that TeleBermuda and BTC are not discussing a merger but ways of offering services together to telephone customers,'' he said.

"It would appear that Mr. Spurling objects to our use of the term joint venture in the story. He seems to take the view that this means a formal financial arrangement, whereas in the context of the story it is being used much more broadly.

"We have no intention of retracting the story, firstly because it is not clear what TeleBermuda wishes to have retracted, and secondly because the story is supported by statements made by TeleBermuda's executives both in yesterday's story and in interviews pulished in the past both in this newspaper and in the rest of the local media.'' Mr. Zuill was referring to a Royal Gazette story published on November 21, 1997, in which TBI chief executive officer Mike Kedar suggested that TBI might partner with BTC to help it compete with companies such as Quantum.

"At the end of the day we will have alliances,'' he said. "We may want to develop an alliance with Telco.''