BT has dismissed claims it is to scrap a £1.2 billion plan to set up a network of Internet data centres.

Today's FT claims the decision was made by BT CE Sir Peter Bonfield and a committee of execs worried that the telco's share price would be hit by the investment.

But a spokeswoman for BT said the story was "unsubstantiated" and "without foundation".

She categorically denied that BT had ditched the investment plans.

However, at least one BT competitor was hoping the FT was true.

John Pummell, European sales and marketing director for Redbus Interhouse, which also provides co-location services, said: "It's all well and good BT investing in this space but what customers really want and need...is an Internet hotel that can provide them with neutrality.

"The Internet and ecommerce are at the heart of so many businesses that, from a commercial perspective, they simply can't afford to have downtime due to poor or inconsistent service from their telco.

"Neutral Internet colocation facilities or Internet hotels most importantly offer customers choice - the freedom to change from one telco to another based on what's right for their business at that particular time, ensuring they remain online and open for business 24 hours a day," he said.

In April, BT, AT&T and Concert announced they were to invest £1.25 billion ($2 billion) over three years to create a network of 44 co-location Internet data centres in 16 countries.

Fourteen data centres are already up and running including sites in Britain, the US and Europe.

A further 11 data centres are due to be opened in the US, Britain, Canada, Germany, the Netherlands, France and Japan by the end of the year. ®

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