Sir Iain's board meeting sparks rumours that BT revamp is ready

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The Independent Online

Expectations that British Telecom is set to unveil a major restructuring rose yesterday after its chairman, Sir Iain Vallance, unexpectedly left the Confederation of British Industry conference in Birmingham to attend a board meeting in London. Sir Iain, who is also the president of the CBI, had been expected to stay at the conference until its afternoon close.

Expectations that British Telecom is set to unveil a major restructuring rose yesterday after its chairman, Sir Iain Vallance, unexpectedly left the Confederation of British Industry conference in Birmingham to attend a board meeting in London. Sir Iain, who is also the president of the CBI, had been expected to stay at the conference until its afternoon close.

The timing of the board meeting - two days before an interim results presentation tomorrow that is expected to provide details of a major restructuring - has puzzled analysts. They noted that BT's directors normally meet the day before a results briefing to approve theaccounts formally.

BT declined to elaborate on the reasons for Sir Iain's early departure from Birmingham. A spokesman said: "This is within hours of the results. It is business as usual."

Major institutional investors remain optimistic that BT will unveil a new, devolved structure tomorrow as well as detail ways to reduce the company's £30bn debt. They believe BT must sell off minority mobile interests outside of Europe and Japan as well as take steps, perhaps through flotations, to raise further cash for investment in its expanding mobile and broadband operations.

The difficulties BT faces as an incumbent operator were illustrated yesterday when France Telecom reported that fixed-line phone revenues fell 3.4 per cent to Ffr64.9bn (£6bn). Fast-growing internet, mobile and foreign operations helped France Telecom post a 22 per cent rise in consolidated group sales to Ffr157bn. The French group is planning to float its mobile assets, including Orange, in the first quarter next year.

Meanwhile, Ignite, BT's internet protocol (IP) and broadband arm, demonstrated the burgeoning demand for data transmission when it unveiled a further investment of up to £200m to expand its evolving next-generation network in the next two years. The network, called Colossus, will use IP infrastructure supplied by Cisco Systems of the US. With the new investment, network capacity will rise from 50 to 250 gigabits upon completion in 2002.

The investment will boost Ignite's ability to deploy new revenue-generating services such as application hosting of online software and video streaming. It will also speed the start of voice-over IP services (VoIP) allowing unlimited phone calls over the Net for the cost of a monthly broadband subscription.

Paul Excell, vice-president of Ignite, said: "We aim to enrich our customers' internet experience by providing them with better and faster internet access, while offering a broad variety of IP-based services and solutions to meet the demands of 21st-century businesses and users. Selecting Cisco as our partner will enable BT to bring innovative, world-class value-for-money IP products quickly to market whilst supporting the high volume growth of our existing portfolio of services."

Mark Kummer, operations director of Cisco's traditional telephone business, said BT and other operators had been caught unprepared by the rise in internet data traffic and forced into ad hoc arrangements. "Now BT is strategically positioning itself to be ahead of the game rather than playing catch-up."

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