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BT is actively pursuing plans to split its UK operation into separate networking and retail divisions.

The Telegraph reports that finance director, Philip Hampton, is leading the project internally amid hopes that such a move would free BT's retail division from over regulation by telecoms watchdog Oftel, although whether it can succeed is being disputed by some experts.

It's hoped that a split would also allow BT's retail division to offer other services including utilities such as gas, water and electricity.

The new network company - called Netco - would supply wholesale services for all telcos.

Any decision to split the monster telco would need Government and regulatory approval.

A spokeswoman for BT said that plans to separate the company were progressing internally with the separation of managerial staff.

Describing the enormity of the task ahead she said: "No-one is completely sure how it would all work."

No decision has yet been made to list either company.

In November last year CEO, Sir Peter Bonfield said: "... NetCo, which will be both structurally and managerially separate. This radical move to re-shape the UK communications industry is no less dramatic in its way than the original privatisation back in 1984.

"The move is pro-competitive and removes any perceived conflicts between NetCo and the rest of BT.

"The new NetCo will be able to focus solely on meeting the needs of the other licensed operators and service providers including, of course, BT Retail and BT Ignite, and they will all benefit from being served by a company that has a clear, separate and exclusive emphasis on their distinctive needs.

I am convinced that the continued expansion in demand for voice, data and Internet products means that the new NetCo will have significant opportunities for growth and a great future," he said.

Earlier this year a report Open Networks: A solution to Britain's Broadband Problems? argued that splitting BT would eliminate the current concerns regarding the make-up and interaction between different parts of BT. ®

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