BBC News Online: Business

BT backtracks on Yell float

BT had planned to float 25% of the directories and e-commerce unit during the first quarter of the year.

This would help BT raise money to combat its mounting debts as part of a wider restructuring package announced in November.

But the company now sees that a demerger - where Yell would be listed as a separate company and fully owned by BT shareholders - could be more profitable.

"It's just an idea," a BT spokeswoman told BBC News Online, stressing that nothing had been decided at this stage.

The plus points

The advantages of a demerger would include a release from regulatory concerns.

A BT spokesman said that the proposed listing of up to 25% of Yell had been affected by a competition review by the Office of Fair Trading.

Poor stock market conditions, especially for the telecoms sector, also means that a partial flotation would reap less money than anticipated.

And the reservations

Bondholders, however, are less enthusiastic because they fear it could herald a break-up of the company.

Any break-up would mean that BT's debt is taken on by a series of smaller companies.

Bondholders see this as a betrayal because BT originally raised the debt as a holding company.

The telecoms company has spent several months looking for ways to reduce its debt of £30bn.