&c1=usa&c2=(none)&c3=MediaGuardian&c4=Media+business,BT+(Media),Media&c5=&c6=Dan+Milmo&c7=2001_05_10){kind=small}
- guardian.co.uk, Thursday May 10 2001 09.19 BST
British Telecom has moved to end its debt crisis by announcing the break-up of the group and a £5.9bn share issue.
The former monopoly will spin off its BT Wireless mobile phone business, while the European network and retail part of the business will be renamed Future BT.
BT will also suspend dividend payments to shareholders and sell its Yell directory business as soon as a government competition inquiry is concluded.
The radical measures will enable BT to meet its target of cutting £10bn off its £30bn debt, but they also leave the group unrecognisable from a year ago.
Sir Christopher Bland, BT's newly installed chairman, said the group had made a "good start" in the battle to turn the company round.
"It will require determined and rapid action by management to achieve the transformation of BT," he said.
"We have made a good start, the culture is changing, and I am confident that we can complete the process in the best interests of our shareholders, customers and staff."
BT's chief executive, Sir Peter Bonfield, who had a greater role in the restructuring and who is himself under pressure to quit, insisted today the company had a "certain" future.
"BT is not on its knees at all. BT is still a very powerful company and we will have, going forward, two powerful companies," he said.
"We want to unlock value for our shareholders. We are trying to reduce the level of debt built up last year... on buying 3G licences and expansion."
He added that he intended to stay for 18 months to see the restructuring through.
Sir Peter, who has headed BT for seven years, told Radio 4's Today programme: "I have just agreed with the company that I am going to stay till the end of next year. After that there will be flexibility."
But the London stock market gave a negative reaction to BT's announcement, marking its shares down 4%.
The restructuring was accompanied by the announcement of a full-year loss of £1.03bn against a profit of £2.94bn last year.
The spun off BT Wireless business is likely to comprise BT Cellnet and BT's wholly owned mobile phone subsidiaries Viag, in Germany, Telfort in the Netherlands, Esat Digifone in Ireland and the Isle-of-Man-based Manx Telecom.
BT's mobile Internet portal Genie will also be included in the division.
MediaGuardian.co.uk special report
