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Wednesday, 2 May, 2001, 15:24 GMT 16:24 UK
BT to quit London HQ

By BBC Business Reporter John Moylan

British Telecom's plans to reduce debt include selling BT Centre, the City of London headquarters purpose-built for the company, BT's embattled chief executive, Sir Peter Bonfield has said.

The announcement came as Sir Peter defended the decision to sell
BT Centre in the City of London
Not even the HQ is safe from the debt cutting programme
off some of the company's key assets to arch-rival Vodafone.

In a conference call to journalists, he said he had always been confident the company could raise the 10bn promised by the end of the year.

He said the disposals of wireless assets in Japan and Spain marked a big step forward and BT shareholders would be getting a good return on their investment.

Staff shrinking

Sir Peter said the company would vacate BT Centre, near St Pauls in the centre of London, within 12-18 months.

The building was purpose-built at the time of BT's privatisation in 1984. It is currently home to about 1,200 BT staff.

But following the company's decision to split its operations into stand alone businesses, it is expected the group's core staff will shrink to about 500 people.

The sale of the building might raise up to 200m.

Tripled

Also on Wednesday, BT confirmed that it had agreed to sell its stakes in Japan Telecom and its mobile subsidiary J-Phone for 3.7bn.

The overall transaction also includes the sale of BT's 17.8% stake in Spanish mobile operator Airtel, and will cut a total of 4.4bn off BT's debt burden after tax.

Sir Peter said BT had tripled its original investment in Japan and was getting five times its investment in Spain.

Global strategy

Last November, BT had said it would focus its geographical interests in Japan and Europe.

The sale of the Japanese assets has thrown that strategy into question.

Sir Peter confirmed he was sorry to be selling the assets but said that to meet its debt reduction target the company had "no sacred cows".

"We did not originally plan to depart from our Japanese holdings because they are excellent companies, but we also said in November we're going to be flexible.

"So when Vodafone approached us against this backdrop we felt we could not and should not reject it."

But Sir Peter rejected claims that BT was exiting Japan altogether.

"We are not pulling out of Japan. The company will continue to do business there through Concert and Ignite" - a reference to BT's joint venture with AT&T which serves international businesses and its global data transmission venture.

Justified

He also rejected the suggestion that his personal position had been undermined by the sale.

"I have very strong personal relationships with people at Japan Telecom and J-Phone. I am a big fan of Japan.

"I look at this as having justified our investment in Japan. Am I sad that we are not staying with our friends? Yes I am."

Sir Peter confirmed that the decision to make the sale had been taken before Tuesday's arrival of the company's new chairman Sir Christopher Bland.

However he confirmed that Sir Christopher had been aware of the move.

Rights issue?

Speaking just weeks ahead of the company's full year results, Sir Peter refused to be drawn on whether the company would launch a rights issue.

There has been speculation for months that BT would need to return to its shareholders to raise upwards of 5bn to plug the hole in its balance sheet.

He denied that the plans had been scuppered by Vodafone's announcement that it would raise 3bn in a share offering: "Just because Vodafone are in the marketplace doesn't lock everyone else out."

BT has also been under threat of a downgrade in its credit rating for some months.

That would push up the company's interest payments by several hundred million pounds a year.

Asked how the Japan sale would impact on the threat of a downgrade Sir Peter said: "This is obviously positive from a debt rating point of view as we get halfway to our target with two transactions."

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See also:

01 May 01 | Business
BT retreats from Japan and Spain
29 Apr 01 | Business
BT's new boss slams licence payout
09 Nov 00 | Business
BT in 10bn shake up
27 Feb 01 | Business
Vodafone lifts Japan Telecom stake
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