BRITISH Telecommunications is still determined to forge an alliance with one of the American telecom giants.

Chairman Sir Iain Vallance, who will be part-time from July, said yesterday that a fresh approach to America was a key pre-occupation, although finance director Robert Brace cautioned that the company was not burning to do a deal.

He pointed to the very high prices at which US telecoms companies were changing hands and indicated he would prefer to wait until the market had cooled.

Brace said an unstoppable tide meant five or six global multi-nationals would come to dominate the global telecoms industry.

He added: ''If you are not in the US, you will not be one of those companies.''

But he went on to say that BT did not necessarily have to be there next quarter or even in the next year.

He was speaking after BT had announced full-year pre-tax profits a mere #16m higher at #3219m even though turnover rose 4.7% to #15.6bn.

The shares reacted by easing 2.5p to 638p.

The figures were complicated by the #238m in compensation received following the break-down of merger negotiations with MCI after the American company accepted a higher bid from WorldCom.

BT stands to make an exceptional profit this year of around #1800m when it accepts the WorldCom bid for its 20% holding in MCI which is worth #4300m.

That payment will eliminate all of its debt, and Sir Iain added that BT is not averse to paying special dividends such as the 35p per share in September 1997 which cost #2200m.

It is not absolutely certain the MCI payment will be received, as Europe's Competition Minister Karl Van Miert has warned he will block it unless the competition issues are resolved.

However, the European Commission has indicated that it will approve the launch of British Interactive Broadcasting.

This #265m investment by the four shareholders - BT, BSkyB, Midland Bank and Matsushita Electric of Japan - will offer viewers a wide range of services, including banking and home shopping from a set-top box costing about #200.

As a condition for clearance from Brussels, BT is to sell its stake in cable TV in Milton Keynes and Westminster.

BT's profits were hit by some #252m of start-up costs on the Continent - the biggest item was a #100m charge for Viag Interkom of Germany which is setting up a fixed and mobile network.

The expansion into France through the Ceqetel fixed network partnership already has some 2.5 million subscribers.

BT is to give a presentation on its Continental plans to analysts next month.

It has a presence in six European countries with access to 10 fixed and mobile licences and has already established itself as either the second or third-largest player in most markets.

In the UK, price cuts amounted to #750m. These included a 5% reduction in the cost of local and national calls, but there was a 7% rise in volume which more than offsetting the revenue fall.

International turnover was hard hit by a 20% price decrease exacerbated by the strong pound. This forced revenue down by 14%.

Redundancies led to a net loss of 3000 people, with 6000 leaving and 3000 recruited.

BT's shareholders will see a slight reduction in the dividend total from 19.85p to 19p, with a final of 11.45p, but this takes account of last autumn's special distribution.