BT Restructures Globally, Buys Out Dutch Partner

In a move that may have far-reaching consequences,
British Telecom announced Thursday
a radical corporate restructuring to improve its flexibility
in today’s markets — while also spending $1.8 billion on
acquiring the remaining 50 per cent of Dutch communications
venture, Telfort, from Holland’s national railway company.


BT says its restructuring will make it unique among
communications companies.


It plans to separate its U.K. fixed network business into
wholesale and retail divisions, each under separate management.
It is also re-grouping its other assets by market sector rather
than geography, creating four new high growth-oriented businesses.


The new businesses are: Ignite, selling corporate and wholesale
broadband; BTopenworld, selling mass market Internet services;
BT Wireless, selling mobile services; and Yell, the former
Yellow Pages, selling directory services.


The four businesses will operate not only in the U.K. but
also internationally where BT has extensive interests.
For example, although it has invested “only” $9.6 billion
in continental Europe it says it can reach 80 per cent of
the population with its mobile and fixed line operations.


Acquiring full control of Dutch operation Telfort indicates
growing confidence at BT, after a rocky ride in the takeover
stakes last year. In the long term, BT’s restructing will
almost certainly lead to separate listings of its various
businesses – a move that would unlock what it believes is
intrinsic but currently hidden value.


“This restructuring will strengthen our position in the key
growth areas of broadband, consumer Internet and mobile and
will help us to realize our aggressive plans to lead the next
wave of the communications revolution,” said Sir Peter Bonfield,
BT’s chief executive.


Sir Peter went on to say that the restructuring will lead to
greater strategic flexibility, will tighten BT’s operational
focus, provide employees with more opportunities, increase
management accountability and enhance transparency for investors.


BT’s restructuring was warmly welcomed by
AT&T, BT’s partner
in the Concert global venture.


“As BT implements its plans, it will be able to put more potential
customers on its own networks. That means AT&T customers served
through Concert will get even faster and higher quality service,”
said C. Michael Armstrong, chairman and chief executive officer of
AT&T.


As Sir Peter Bonfield explained, BT views Europe as its home market,
where it currently has over 18 million customers — including
15 million mobile and 1.5 million Internet customers. The company
has equity joint ventures or wholly-owned subsidiaries in all major
European markets.


Rob den Besten, chairman of the executive board of Dutch railway
company Nederlandse Spoorwegen (NS), said BT’s offer had come at the
right time as NS faces high investments in the near future.


“Intensive co-operation between NS and Telfort will continue for
our telecommunications and e-commerce developments, where we will
use Telfort and BT’s knowledge and experience,” confirmed den Besten.


In early summer, Telfort will be one of the first of BT’s European
ventures to launch Genie, it mobile portal and Internet service
provider.

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