BT releases its demerger plans

To be put to shareholder vote

BT has released all the formal details of its demerger plan today, sent a copy to every shareholder and announced an Extraordinary General Meeting (EGM) in Birmingham on 23 October to ask for official approval.

There's not much in it that you won't already know. The main point of course is that the company will be split into two. mmO2 - formerly BT Wireless - which consists of all mobile businesses owned by BT will be floated off as a separate arm.

Then everything else - with the exception of Concert (but more of that later)- will remain as is and be called BT Group. (We're assured that the name Future BT which was bandied around when the demerger was first announced was never going to be a trading name. Must be our flawed memory again.)

Every shareholder gets a vote and if the proposals are accepted - which, of course, they will be - the demerger becomes effective on 19 November 19, when trading in both stocks will start at the London and New York stock exchanges. Every BT shareholder will be given an mmO2 share.

Another announcements, not really unexpected, is that there will be no interim dividend for the year ending 31 March 2002, but from then on dividends will start up again - although they will be lower than previously.

What about the huge loss-making monster that is Concert, the joint venture with AT&T? Apparently, "BT is continuing discussions with AT&T concerning the future of the Concert joint venture." It is still considering its options - which are: one, shutting up shop; or two, "continuation of the venture in a modified form".

What this basically means is that new chairman Sir Christopher Bland is having as hard a time getting rid of it as had his previous Board members (we include Sir Peter Bonfield as a previous even though he's still grasping to the CEO post). Discussions will be over by the end of the year, we are told.

The company warns that sorting out the Concert problem is "likely to include cash and non-cash restructuring costs which could be substantial". It also warns of an impairment charge of £500 million with regard to its share in AT&T Canada.

Sir Christopher sold the deal to shareholders like this: "Your Board believes that, given the different market focus and expected growth characteristics of BT Group and mmO2 , these businesses would benefit from independent access to the debt and equity markets. The demerger of mmO2 should also allow BT Shareholders to benefit directly from value created by the mmO2 business. In addition, the new holding company structure for the BT Group businesses will provide flexibility to enable further structural change, should the board of BT Group plc believe that such moves would be in the best interests of that company and its shareholders as a whole." Catchy, huh?

The other interesting thing of note was a laying out of mmO2 strategy. This consists of five points: increase in market share of higher value customers, especially business and high-usage individuals and young adults; achieve competitive scale in Germany and the Netherlands; focus on customer retention through good customer service and network quality; reduce costs by tight budgetary control and innovative measures; exploit opportunities for performance improvement by integration across mmO2 plc, helped by the focus of the new O2 brand.

Pretty much commonsense.

One interesting thing is the inclusion of online video interviews with all the main heads in BT on the company's Web site. My God, do you think BT has finally grasped the communication possibilities that the Internet offers? This has the distinct advantage of allowing people to hear news from the horse's mouth instead of going through the filter of journalists. God help you.

Anyway, the full package can be found here, so enjoy.

Plus, just for the sake of completion, here's what BT will become:

BT will split into

  • BT Group
    • BT Ignite - Internet services, data services etc
    • BT Openworld - the company's ISP business
    • BT Retail - residential and business telephone provider
    • BT Wholesale - Networking services and other services for telcos and ISPs

  • mmO2
    • BT Cellnet
    • Digifone
    • Telfort Mobiel - Netherlands
    • Viag Interkom - Germany
    • Manx Telecom - Isle of Man
    • Genie - WAP portal, soon defunct



And that's it. ®

Related Link

All you need to know about the demerger

Related Stories

mmO2 still a bit shaky
BT Wireless changes its name to mmO2
BT shake-up to save business (touch wood)
So what's the future of Future BT?

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