War on debt starts today for BT

NEWS Shareholders will be asked to stump up £5.9bn with the sweetener that their new shares will cost only £3, as opposed to the £5.25 they are fetching in the markets today. This will be done as a three for ten rights issue. On top of the £5bn already raised through sales of Asian enterprises and all of its vehicles, properties and masts, this will immediately cut the debt by the £10bn that BT has been promising for so long. The main company is to be split into BT Wireless and Future BT. BT Wireless is to be completely demerged - with details of how to be released later. BT Wireless is estimated to be worth about £20bn. It would be an attractive takeover or merger target, with Spain's Telefonica Movile a strong contender. BT also presented its interim annual results showing pre-tax profits up slightly at £6.492bn and turnover up nine per cent at £20.427bn. Sir Christopher Bland, BT chairman, said: "It will require determined and rapid action by management to achieve the transformation of BT." The company's directory service Yell has long been up for sale, but an as yet unresolved Office of Fair Trading investigation into the directories market has held it back. However, its sale to a consortium led by venture capitalists Apax Partners and Hicks, Muse, Tate and Furst for around £3bn is regarded as a done deal. BT is also in talks to sell its share of the fading Concert joint venture with AT&T. The ailing American giant is the only possible buyer but it is broke. What's left of BT, or Future BT, will amount to what the company used to be when it was part of the Post Office, with broadband the only added extra. Bland said: "In Future BT, which has a customer base of 22 million, we shall build on our leadership position and develop our presence. Our key goal is to bring new partnerships and services to a larger customer base.