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BT today announced a widescale re-organisation which it prays will turnaround the fortunes of this ailing corporate giant.

The company is to be split in two, creating a new business called "Future BT" which will concentrate on the telco's European network and retail business. At its heart will be BT's operations BT Retail, BTopenworld, BT Wholesale, BT Ignite and Concert.

It is also planning to demerge fully BT Wireless - its mobile phone operation which includes BT CellNet and its mobile portal Genie - into a separate company.

The telco has confirmed plans for a £6 billion rights issue and, as widely trailed, has decided not to pay a year-end dividend or an interim dividend next year in a move which should save the company £1.4 billion.

BT's new broom chairman, Sir Christopher Bland, said: "It will require determined and rapid action by management to achieve the transformation of BT; we have made a good start, the culture is changing, and I am confident that we can complete the process in the best interests of our shareholders, customers and staff."

Speaking on the BBC's Today programme CEO, Sir Peter Bonfield, denied accusations that the company was "in a mess" or "on its knees" insisting that BT was still a "very powerful business".

He also denied that the vast sums spent on purchasing 3G licences, a major reason why BT is carrying such a debt burden, was a mistake

And he scotched speculation that his job was on the line, saying that he intended to stay and see the restructuring through to the end.

Market reaction to BT's restructuring plans has been swift. In early morning trading BT's share price fell 30.5p (5.36 per cent) to 537p. ®

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