BT Profits Fall, Sell-Off Begins

[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.