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OFT rules on BT's Yellow Pages business

Raises doubts about sale

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The Office of Fair Trading (OFT) ruled today that BT's Yellow Pages business should be subject to a cap on advertising fees for four years from January 2002.

The decision from the OFT was supposed to help clear the way for the sale of BT's Yell business raising an expected £3 million towards BT's £30 billion debt mountain.

Instead, the decision appears to have thrown some doubt onto the future of the deal.

Reuters today quotes an unnamed source close to the deal who claims that as much as £1 billion could be wiped off the value of the business as a result of the OFT's decision today. The same source even casts doubt over whether the deal could go ahead in light of the decision.

However, it's reported that bankers involved in the negotiations believe the £1 billion price cut is too ambitious although they do concede that the OFT's decision is likely to lower the final sale price.

Just in case you haven't heard, yesterday BT announced a £6 billion rights issue and said that the company would split in two as part of its bid to clear its debt. ®

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