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Thursday, 8 November, 2001, 18:03 GMT
BT unveils massive loss
BT control centre
BT's underlying business remains profitable
British Telecom has announced a huge loss for the second quarter of the year, as it bears the costs of unwinding a joint venture with US rival AT&T.

The loss for the three months to the end of September was 1.35bn, caused by a 1.37bn write-down in the value of its assets.

Almost all that write-down was the result of the agreement to close Concert, a venture under which BT and AT&T hoped to exploit the market for corporate telecoms services - but which suffered persistent losses.

At the same time, the company confirmed rumours that Philip Hampton, its respected finance director, was to step down next year.

Mr Hampton, who was seen as the brains behind the company's recent restructuring and debt-repayment efforts, will be leaving the company entirely.

At one time, Mr Hampton had been tipped to become BT's next chief executive.

Better news

More cheering for BT shareholders was the news that, once the Concert charges were stripped out, BT broadly maintained its underlying profits at 1.39bn in the second quarter.

But that figure comes towards the lower range of analysts' expectations, and BT shares fell by 6% before formal trading opened on Thursday morning.

The firm said that its prospects for the immediate future were reasonably sound.

"Although the general economic outlook for the second half of the financial year is uncertain following the events in the US on September 11, most of BT's businesses have strong market positions and have so far proved to be relatively resilient," said BT chairman Sir Christopher Bland.

Wireless hopes

A key issue for the group is performance at its wireless arm, MMO2, which is to be spun off on 19 November.

BT secured shareholder approval for the MMO2 demerger last month.

MMO2 reported a narrowing loss for the second quarter. The subsidiary lost 94m on an operating basis, compared with 127m in the same quarter of last year.

Peter Erskine, MMO2's chief executive, attributed the improvement to strong subscriber growth and - more importantly - enhanced quality among its subscribers.

Almost 11% of MMO2's revenues now comes from data traffic, which is proving more promising than providing mobile phone services.

In a continued effort to cut costs in its international operations, MMO2 said it had joined forces with Dutch KPN to co-operate on building third-generation mobile networks in the Netherlands.

Heads roll

Mr Hampton's departure will, however, be seen as bad news for the firm, which has suffered a series of high-profile departures recently.

Last week, it was announced that Sir Peter Bonfield, chief executive of the firm since 1996, was to stand down a year early.

And Sir Iain Vallance, the previous chairman, stepped down in April as criticism grew of a corporate strategy that landed BT with almost 30bn of debt.

One of Mr Hampton's key achievements had been to pay down that debt mountain: net debt at the end of the second quarter was just 16.5bn.

The company's management is under severe pressure to perform, as the company's shares have dropped by 70% in the past 18 months.

Analysts worry that BT's aggressive plans to demerge non-core businesses could leave the firm little more than a shadow of its former self.

BT's share price closed the day 4% lower at 325p.

See also:

31 Oct 01 | Business
Who's next for BT's hot seat?
31 Oct 01 | Business
BT chief quits early
31 Oct 01 | Business
Boom time for bosses
22 Oct 01 | Business
BT eyes Post Office vans
16 Oct 01 | Business
BT axes AT&T joint venture
02 Aug 01 | Business
BT bidders in talks with watchdogs
30 Jul 01 | Business
BT local loop 'not for sale'
26 Apr 01 | Business
Vallance resigns from BT
12 Oct 01 | Business
BT chief 'to quit early'
09 Jul 01 | Business
BT Cellnet loses second ranking
13 Jun 01 | Business
BT hires demerger specialist
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