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Monday, 19 November, 2001, 17:19 GMT
Strong start for BT's MMO2
O2 logo
MMO2 is now a separate company from BT
MMO2 - the mobile phone business of UK telecom group BT - has begun life as a separate company after trading in its shares started on the London Stock Exchange.

The shares traded briskly, and closed the day at 84p, up 5% from their starting point of 80p.

MMO2 brands
BT Cellnet (UK)
Viag Interkom (Germany)
Telfort (Holland)
Esat Digifone (Ireland)
Manx Telecom (Isle of Man)
Genie mobile internet business (Europe)

Heavy dealing in the stock saw 130 million shares change hand during the morning.

Meanwhile, shares in the newly named BT Group closed up 4% at 290p.

MMO2 was valued at 6.7bn ahead of the start of trade on Monday.

Takeover target?

The company has about 17 million customers and more than 15,000 employees, with revenues for the year ended 31 March 2001 of 3.2bn.

If we can get the company to perform we can be masters of our own destiny

David Varney
chairman of MMO2
There has been speculation that MMO2 may become a takeover target, with some analysts arguing it is not big enough to survive as a separate entity.

But speaking on BBC Radio 4's Today programme, MMO2 chairman David Varney said he thought it was a viable business.

"If we can get the company to perform we can be masters of our own destiny," he said.

Management the key

The performance of the new company's management is crucial, said Karen Robertson, investment director at Standard Life Investments, which is a major shareholder in both BT and MMO2.

Also speaking on the Today programme, she said the new firm was a relatively weak player in Europe, and much would depend on whether it could improve the performance of its Viag Interkom business in Germany.

But she said the management at MMO2 has a good track record and was well regarded in the City.

Mixed views

Financial experts are divided about the prospects for the new firm.

We see the demerger of MMO2 from BT as a positive step, despite our reservations about the overall group valuation

Goldman Sachs
Several have given the demerger the thumbs-up.

"We see the demerger of MMO2 from BT as a positive step, despite our reservations about the overall group valuation," said Goldman Sachs investment bank in a recent research note.

Daiwa Institute of Research and Schroder Salomon Smith Barney were also fairly optimistic, but Teather & Greenwood's analyst Kevin Fogarty's advice was simple: "Sell".

In addition, John Hatherly from fund manager M&G - one of MMO2's top 10 shareholders - described the new company as "a relatively weak player" compared with Vodafone or Orange.

BT shareholders have received one share in MMO2 for every share in the parent group they already held.

Both BT Group and MMO2 are expected to be included in the FTSE 100 index of leading UK companies.

Christian Maher, Investec Henderson Crosthwaite
"In hindsight one might look on this split as actually BT being ahead of the game"
The BBC's Rory Cellan Jones
"BT is now two companies each facing uncertain futures"
MMO2 Chairman David Varney
"If we can get this business to perform, we will be the masters of our own destiny"
See also:

08 Nov 01 | Business
BT unveils massive loss
31 Oct 01 | Business
BT chief quits early
31 Oct 01 | Business
Few takers for BT hot seat
23 Oct 01 | Business
BT approves mobiles spin-off
23 Oct 01 | Business
MMO2: A risky investment?
24 Sep 01 | Business
BT chiefs mull total split-up
22 Oct 01 | Business
BT eyes Post Office vans
19 Sep 01 | Business
BT loses enquiries monopoly
05 Sep 01 | Business
Mall disputes BT name change
03 Sep 01 | Business
BT unveils new mobile brand
02 Sep 01 | Business
BT heads for November demerger
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