BT Profits Fall, Sell-Off Begins
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[London, ENGLAND] With profits for the quarter substantially reduced, BT announced Thursday it will sell off up to 25 percent of its mobile unit BT Wireless and possibly some of its high-speed Internet network BT Ignite.
Shares in BT rose briefly on the London Stock Exchange following the announcement, before slumping by 4.5 percent.
Net income for the quarter ended September 30 fell from nearly US $900 million to around US $384 million, although the company pointed out that it has changed its accountancy methods -- making these figures an unreliable guide to overall performance.
Nonetheless, there is no disputing that BT is sitting on (or is it under?) a mountain of debt, following its purchase of 3G mobile licenses. Chief Executive Peter Bonfield said he wanted to reduce BT's debt to US $28 billion by the end of next year.
Among the cost-cutting measures is a sharp reduction in the number of management jobs. BT says it will have cut 5,000 jobs by the end of the year with more to come in 2001.
In a fast-changing marketplace BT will need fewer people, said Bonfield, and this trend is set to continue.
However, by far the most effective way of reducing BT's debt burden will be to sell off parts of the company. This has been the purpose of the extensive restructuring of the company over the past year.
BT's rivals, such as Deutsche Telekom AG and Telefonica SA, have already floated some of their business units. Vodafone, too, has disposed of assets to reduce its level of debt, following its purchase of Mannesmann AG and AirTouch Communications.
BT plans to create a holding company named BT Group to hold assets such as its wireless Internet operation BT Openworld. No further information about this aspect of restructuring will be available until February next year.
Experts have placed the value of BT's wireless arm at between US $29 billion and US $41 billion, depending on whether or not the unit is sold free of debt.