BT chips away at debts with satellite sell-off

British Telecom agreed to sell its aeronautical and maritime division to Stratos Global of Canada for £157m yesterday, in the first of what could be a number of disposals in the coming months as BT focuses on core business areas and cuts debt.

British Telecom agreed to sell its aeronautical and maritime division to Stratos Global of Canada for £157m yesterday, in the first of what could be a number of disposals in the coming months as BT focuses on core business areas and cuts debt.

The business operates land earth stations and provides a global range of Inmarsat based mobile satellite services. These allow calling to or from remote locations at sea, in the air or on land where other telecoms networks are not available.

Last week, BT's credit rating was downgraded by Standard & Poor's after the company spent £9bn to double its stake to 90 per cent in Viag Interkom and fund the German company's universal mobile telecoms service licence. On current projections from Robert Brace, BT's finance director, net debt could hit £30bn next year. Pressure, however, has remained acute for BT to avoid hitting that figure.

Analysts believe the fastest way to raise cash would be for BT to seek an initial public offering of its wireless division. In addition to the number two position in the UK market with Cellnet and now effective control of Viag, Germany's smallest mobile operator, BT has numerous minority stakes across Europe as well as in Asia and Canada. It also has full control of mobile businesses in Ireland, the Netherlands and New Zealand.

Analysts value the wireless arm at between £40bn-£45bn. Were BT to float a 25 per cent interest, analysts believe BT could raise around £10bn and improve balance sheet flexibility. More importantly, new stock would give BT a valuable currency for acquisitions.

BT shares, aided by the continuing rally in telecoms, yesterday added 5p to 880p. They peaked in January at 1,513p.