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BBC Business correspondent, Rory Cellan-Jones
"BT claims it is the most radical change since privatisation."
 real 56k

The BBC's John Moylan
"BT's shares fell in London on the news."
 real 56k

Sir Peter Bonfield, BT chief executive
"This is not something we fell into by accident"
 real 28k

Thursday, 9 November, 2000, 17:41 GMT
BT in 10bn shake up
People on the move using mobile phones
BT is to float a stake in its wireless operations
BT has announced a radical restructuring plan to reduce its burgeoning debt.


BT will be better placed to prioritise and pursue the main opportunities for growth, which will be in wireless, broadband and IP

Sir Peter Bonfield
BT
Confirming market expectations of a big drop in profits, BT said it would be floating a stake of up to 25% in its wireless operations, which include BT Cellnet, in the second half of next year.

It said it would float up to 25% of its network, first splitting it into a new company to be called NetCo.

BT will also spin off up to 25% of Yell, its phone directories division, and make progress towards listing BT Ignite, its internet business.

'Dramatic'

In addition, the company said it would be selling the bulk of its worldwide assets outside Western Europe and Japan.

Altogether, BT said the measures should raise at least 10bn for debt repayment by the end of next year.

At the end of September, BT debt stood at more than 18bn but it is expected to reach 30bn by next March as a result of the costs of third-generation mobile phone licences and acquisitions.

Chief executive Sir Peter Bonfield said the reshaping was "no less dramatic in its way than BT's original privatisation back in 1984".

Sir Peter denied that he and chairman Sir Iain Vallance had been at loggerheads over the restructuring and said neither would be leaving the company.

Profits down

In its half-year results, BT confirmed that its profits had slumped, but the figures were better than had been predicted by analysts.

Pre-tax profits for the second quarter fell to 471m, from 890m a year earlier.

Analysts had forecast 375m to 440m.

Turnover rose from 5.33bn to 7.6bn and the half-year dividend was held at 8.7 pence per share.

Earnings per share fell from 9.6p to 4.2p, but beat forecasts of 3p to 4p.

BT said it had exceeded its target of reducing management numbers by 3,000 and said more than 5,000 staff will have left the company by the end of this year.

The firm emphasised that it was not announcing any new job cuts but Sir Peter later told journalists he expected a similar number of jobs to go each year for the foreseeable future.

Costly licences

Analysts say the restructuring is necessary because the cost of buying next-generation mobile phone licences in Europe has pushed BT's debts up sharply.

This resulted in the company being seen as needing to cut back its debt if it was to retain its "A" grade credit rating from Standard & Poor's.

The debt issue has helped push BT shares down to about half their 12-month high of 14.23.

But the stock did rise on Wednesday as investors anticipated the announcement of a restructuring plan, climbing 19.5p (2.5%) to 788p.

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See also:

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The rise and fall of BT
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