BT plans sale and restructure

BT is planning a radical restructuring and a sale of the family silver to stem its flow of red ink.

Following earlier restructuring plans announced last April, BT plans to reduce its mountainous £30bn debt to £20bn y December 2001, through a series of partial flotations and the disposal of a large volume of assets outside Western Europe and Japan.

The changes are "radical and unprecedented", according to the company's embattled chief executive, Sir Peter Bonfield. "We're moving from a relatively centralised structure to a very decentralised structure," he said. "This marketplace does not stand still."

The company's comeback strategy aims to reassure its shareholders that it can retain its 'A' grade credit rating and reduce its debt.

BT plans to float up to 25 per cent of its directory business Yell by the end of this financial year, and hopes to offload 25 per cent of BT Wireless by the second half of 2001. It confirmed that it will develop BT Ignite, its broadband business, into a business more attractive to investors.

It is also seeking government and regulatory approval to create a new networking company, NetCo, to focus on wholesale business. BT believes that customer demand for wholesale services will double in the next five years. NetCo too will be groomed for partial sell-off.

Another part of BT's reorganisation plan will be the creation of a new 'umbrella' holding company that will manage BT's businesses, including NetCo, on an arms-length basis. BT believes this will allow it to transform the businesses by utilising the benefits of separation without losing the financial backing.

Tim Johnson, principal analyst at Ovum, said that BT has made a good strategic move with this restructuring, but that it should have moved sooner."BT is going in a good direction, but not fast enough or far enough," he said. "I would like to see it take some rapid steps towards devolvement."BT claimed that this is just the beginning of its evolutionary process. "In a year to 18 months BT will look and feel quite different," said Bonfield. "We're not stopping here."