BT shares slide as concerns grow over spin-offs

British Telecom shares slid a further 6.5 per cent yesterday, as uncertainty and disappointment deepened concerning the company's planned restructuring.

British Telecom shares slid a further 6.5 per cent yesterday, as uncertainty and disappointment deepened concerning the company's planned restructuring.

Scrutiny focused on whether selling off just 25 per cent of NetCo - a newly created wholesale entity that will own the national network infrastructure - went far enough. There were also concerns about what assets BT will sell to raise an extra £5bn beyond the £5bn to be raised through selling 25 per cent stakes in both its wireless division and Yell, the directory services arm.

John Tysoe, an analyst with WestLB Panmure, said: "I'm in favour of a spin-off of the wholesale [NetCo] division, but it needs to be completely sold off, not just 25 per cent. Not splitting it off completely just won't work."

On Thursday, after the market had digested the announced restructuring, BT's shares closed down 5 per cent. A market-maker in BT shares, commenting on yesterday's renewed fall, said: "The results figures were okay, but everything about the restructuring is so much in the future. There's nothing definite and people are a bit fed up with the stock." BT shares closed down 49p at 700p, leaving the stock at less than half its January peak of 1,520p.

The difficulty with initiating disposals when telecoms sector valuations have plunged was underlined by reports from Hong Kong that BT's 20 per cent stake in SmarTone Communications, which cost HK$3bn (£270m) in May, is now worth about HK$1.4bn. Research from ABN Amro indicated that the value of BT's minority wireless stakes in Canada and Asia, not including the Japanese holdings that BT intends to retain, is about £2bn. This implies that European assets in Spain and France, not thought to be up for sale, will need to be sold to secure the £5bn goal of the disposal programme.

Meanwhile, BT and Oftel announced that the telecoms giant had yesterday agreed to launch local loop unbundling in an initial 600 exchanges between January and June. BT had previously agreed to unbundle 380 exchanges by March.