So what's the future of Future BT?
The jury's still out. And that's the problem
The multiplicity of announcements from BT yesterday still has analysts, investors and reporters scratching their heads over what the future holds. Right now, "future" is a big word for the lumbering telecoms giant.
The announcement proper at BT's headquarters yesterday was held in a futuristically decorated part of the building - lots of swirls and curves and minimalist plastic in soft blues. And of course, the old-style BT - once all the mobile operators have been pooled into BT Wireless and demerged - is called Future BT.
But what is the future of the two new BTs? Will BT Wireless, free from the corporate shackles of the giant's other businesses, take off, capitalising on the booming mobile market and become a powerful force within a few years?
Or will it, like some have suggested, be weighed down by 3G licence debt and ripe for takeover from other companies hungry to get hold of its valuable stakes in big mobile operators in the UK, Germany, Ireland and the Netherlands?
Back to the Future
Likewise Future BT. The company basically consists of the fixed-line network it inherited when privatised and the Internet services that ride on top of it. Will Future BT - as CEO Sir Peter Bonfield claimed yesterday - exploit broadband access and expand into more businesses and home as the Internet becomes ubiquitous? Or will it find its market share dwindle over the years, suffer customer disillusionment and end up being carved up by stronger and nimbler competitors?
You'll find articles supporting all aspects of this crystal-ball gazing in the next few days and months. And that is precisely the most disturbing aspect. People are simply unsure whether BT is doing the right thing. The board told reporters it was chuffed Standard & Poor had only downgraded its rating from A to A minus - that meant it wouldn't pick up extra interest charges on its huge debt. Today, Moody's shifted BT onto a BBB rating - immediately putting £30 million on its interest bill.
The company could have been split in 20 different ways - each with its advantages and disadvantages. It has mooted a range of possible approaches over the years but in the end went for putting all the troublesome mobile businesses under one umbrella, spinning it off and leaving the rest as is. The BT board has never really understood the mobile business anyway.
Yell, whose future BT has been fretting about for over a year, is to be sold. Either that or demerged. It doesn't know which. But it won't come into the new super Future BT that's for sure. Not exactly decisive behaviour from the people that are trying to make a clean sweep of things.
They don't know what to do with Concert either. But then Concert can't be treated as badly as Yell or AT&T will get angry and you don't want to mess with AT&T. And so Concert sits at the back of the class, making itself a nuisance and spunking a quarter of a million pounds a quarter.
Uncertainty breeds uncertainty
Why didn't BT split off its Internet businesses? Because then the board wouldn't have anything to do but sit on its inherited and disintegrating network - like a latter-day Miss Havisham.
This does not bode well for the people working for BT Openworld or BT Ignite because the board hasn't got a clue about the Internet either. With the troublesome wireless boys out the picture, Bonfield, Bland and Hampton can concentrate on imposing their out-dated Web beliefs.
It seems unlikely that BT Wireless will find itself usurped by a larger and richer telecoms company. Would the City allow anyone to raise that sort of money for the next few years, what with 3G around the corner? Probably not. And one thing everyone should remember is that Hans Snook reckoned when 3G actually took off, people would think the huge prices paid for its licences would be cheap. Now, if only the head of BT Wireless Peter Erskin could get Hans to fill the vacant post of BT Wireless chairman.
Future BT is going to have to come up with something spectacular. The company is just too huge to rely on Internet services to keep it rolling. Yes, it has good, solid revenues from fixed-line business. It's worth a lot of money. But the hold it has over the network is being gradually removed. FRIACO and LLU may have been false starts but there can be no doubt that just because the company is cutting loose its wireless arm that Oftel will suddenly decide BT can go back to jealously guarding its property.
BT will see its market share get smaller and smaller every year. And it just isn't exciting to back a company that is protecting its corner rather than taking on all-comers. And never underestimate the traditional British support for the underdog.
We haven't even mentioned what the small-time shareholders in BT - which account for 20 per cent of all shares - will think of all this. Many have stuck with BT since it was first privatised 17 years ago.
The last year has seen the value of those shares drop by 70 per cent. This year and next they don't even get a dividend. And then they are asked to put more money into the company in the form of a rights issue. How many Smiths and Richardsons will be thinking "good money after bad" this weekend?
If BT loses it core supporters, people that never dabble in shares day in day out to make a few pence here and a few there, it loses its stability and becomes just another telecoms company. And it simply can't afford to do that at the moment.
We cheekily asked the BT triumvirate yesterday if it had it own estimate as to when the share price would finally start moving up. After a lengthy pause and a brief quip, Sir Christopher responded precisely. "No." ®
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