BT meets investors after confirming Yell may be demerged

BT was last night meeting a number of its shareholders after confirming that it was reviewing all options for Yell, including looking at a full demerger of the directories business, which analysts estimate could be worth £4bn to £5bn.

BT was last night meeting a number of its shareholders after confirming that it was reviewing all options for Yell, including looking at a full demerger of the directories business, which analysts estimate could be worth £4bn to £5bn.

The company said its original plan of floating up to 25 per cent of Yell had been affected by the ongoing OFT review into that division. However, a BT spokesperson said the company could go ahead with a demerger of Yell with the outcome of that review still pending. "It (the review) has lasted longer than we expected and market conditions have changed and the thinking has changed," a BT spokesperson said.

The company said: "One option would be a full demerger of the business, although such an option would be subject to the resolution of certain technical issues such as taxation." Analysts speculated the business could also be disposed of in a trade sale but warned there would be a limited number of buyers with deep enough pockets.

BT insisted yesterday there was nothing unusual about last night's dinner meeting with a number of shareholders, despite the company being in closed period. Third quarter figures from BT are due next week.

"We have ongoing relations with big and little groups of shareholders. Any Plc has regular meetings with shareholders and this is the latest. It is simply another shareholder meeting," BT said.

Investors are likely to question BT about its restructuring plans including the Yell and Wireless floats as well as possible changes in its dividend policy. BT said it would make a further announcement on its plans for Yell "as soon as is practicable". The proceeds would help BT hit its target of cutting £10bn off a projected £30bn debt mountain by the year end. BT is also expected to float its mobile division, BT Wireless, and make other disposals. Paul Mount, a telecoms analyst at Nomura, said there were a number of assets BT could consider hiving off including stakes in Japan Telecom, French-based Cegetel and assets in Spain and Italy.