BT names the date for £15bn wireless spin-off

Click to follow
The Independent Online

BT will this week press ahead with the £15bn demerger of its wireless division, by revealing that it has pencilled in 19 November for its stock market debut.

The telecoms company will make the announcement on Wednesday in a planned four-hour presentation to City analysts.

At the meeting BT's chief executive, Sir Peter Bonfield, will also unveil a new name for the division and provide analysts with detailed financial information, such as debt levels. It is understood that BT is seeking a "BBB" credit-rating for the division. Many analysts believe BT may load up the company with around £2bn of debt with a facility to borrow a further £3-4bn.

The wireless division, including Cellnet in the UK, last year made a £225m operating loss on turnover of £3.94bn. It is not expected to make a pre-tax profit until 2005.

The analysts' meeting will signal the start of the formal marketing process for the wireless division. A prospectus will be published in late September, culminating with a shareholder vote at an extraordinary general meeting to approve the spin-off.

The demerger of the loss-making division, run by Peter Erskine, is integral to BT's restructuring plans. When completed, it will leave the rump, named "Future BT", that includes its fixed-line wholesale and retail operations. However, trade unionists are threatening to disrupt the demerger over feared job losses. Last week, the Communication Workers Union, which claims 80,000 BT members, said it would seek alliances with disgruntled institutional shareholders to block the deal. While no shareholders were prepared to say if they were planning to oppose the demerger, the union said it had already held a series of positive meetings. Last week the union sent BT chairman Sir Christopher Bland a letter outlining its objections and is seeking a meeting with Trade Secretary Patricia Hewitt.

At Wednesday's meeting, analysts are likely to question Sir Peter on his future commitment to BT. Recent reports, strongly denied by BT, suggested that the chief executive may seek an early exit from the company.