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BT's 'radical' shake-up
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April 13, 2000: 6:13 a.m. ET
Telecom firm outlines listing plans in long-awaited revamp; shares advance
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LONDON (CNNfn) - British Telecommunications unveiled a long-awaited restructuring plan Thursday designed to boost the value of its businesses ahead of a series of public offerings.
The company has been under pressure from investors in recent months as a slide in earnings sent its share price tumbling and made the U.K.'s second-largest telecom operator by market value a takeover target, according to analysts.
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BT's Yellow Pages directory and e-commerce unit, renamed Yell, is the first business slated to go public, and will be listed in London and on one other exchange later this year. Analysts said the company's cellular arm, to be known as BT Wireless, will probably be the next to come to the market.
BT [LSE;BT-A] shares climbed 3 percent to 1,122 pence in mid-morning trade, valuing the firm at £73 billion ($116 billion), some £25 billion less than on Dec. 31
 BT will regroup its other assets along product rather than geographic lines under four brands.
"These changes are driven by broadband, mobility and the Internet," BT Chief Executive Peter Bonfield told CNNfn.
The broadband business - which provides high-speed data and voice transfers -- will be renamed Ignite, while the company's consumer Internet business has been branded as Btopenworld, with BT Wireless and Yell completing the line-up. All have been slated for possible separate listings, with a final decision on share offerings by the end of the year.
Bonfield denied that his own job was under threat after a 24 percent slide in BT's share price this year, or that the shake-up was too little, too late.
"This is a very radical restructuring, which we've been through with our major shareholders and which I think has been well received," said Bonfield. However, the company said Thursday its U.K. Managing Director Bill Cockburn would leave the firm.
Mobile costs mount
The Yell unit, which includes a U.S. phone directory publisher, has been valued by analysts at around £5 billion, while Cellnet is thought to be worth about £30 billion. BT acquired control of the U.K.'s second-biggest mobile-phone operator unit when it bought out partner Securicor (SCR) last year.
While BT aims to crystallize the value in its core assets, it also has to fund expansion, which includes a £4 billion investment over the next three years in its European Internet and broadband network.
 BT also faces a spiraling bill to secure a third-generation U.K. mobile license, allowing it to roll out high-speed Net access and data transfer to mobile phones.
The British government's auction of the new cellular licenses, now in its fourth week, has seen BT and archrival Vodafone AirTouch (VOD) vie for the license offering the broadest spectrum. Vodafone led the race with a $4.55 billion bid in the latest bidding round Wednesday - a bid that equaled the sum that analysts expected the sale of all five new licenses to raise.
U.K. outlook still clouded
BT noted that the changes were driven in part by regulatory intervention in its domestic market, where profitability plunged last year amid fierce price competition. It said it would split its U.K. fixed-line business into consumer and corporate units to clarify the regulatory framework under which they operate.
BT and the U.K. government have clashed in recent months over a regime of regulations that BT claims is discriminatory, though Bonfield said that the mood at Oftel, the national telecom industry regulator, had changed in recent discussions.
BT also said it would pay £1.2 billion ($1.9 billion) to acquire the 50 percent of its Dutch fixed-line and mobile operation, Telfort, that it does not already own, from the Dutch national railroad operator, its venture partner.
BT is due to report fourth-quarter and fiscal-year earnings on May 18. The company said in February its third-quarter profit slumped 23 percent to £453 million, and Bonfield said at the time that the last quarter would show little or no improvement. 
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