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Since
then, stock market volatility throughout the world,
particularly in the telecommunications sector,
has led us to reconsider whether selling off equity
in parts of the business via the IPO route represents
the best way ahead for the company.
As a result, we announced
in May our intention to demerge BT Wireless and
so create two substantial companies,
BT Wireless
and Future BT.
BT Wireless
We plan for BT Wireless
to include all of our fully-owned wireless assets
in the UK and Europe, and Genie, one of Europe’s
leading mobile internet portals. It should be
a high-growth business, strongly positioned to
develop third-generation services by taking advantage
of its leadership in mobile data. It will be an
independent wireless operator in a market which
is consolidating.
Future BT
Future BT will combine
four separately managed businesses, BT Retail,
BT Wholesale, BTopenworld and BT Ignite to form
a focused European network and retail group concentrating
on voice and data services. Its aim is to create
value based on service excellence, its brand leadership,
its large scale networks and its existing customer
base. It will also develop and market new, higher
value broadband and internet products and services.
Your investment in BT will,
therefore, provide ownership of two strong and
separately quoted businesses, and the flexibility
that gives shareholders. Although both companies
are expected to be major components of the FTSE
100, they will have contrasting financial profiles:
BT Wireless, high growth; and Future BT, well-established
and cash generative.
The separation into distinct
businesses gives our management teams greater
focus and accountability. It enables them to focus
hard on productivity and their own customer segments,
and it gives each business more flexibility for
forging partnerships and strategic alliances.
We are already gaining distinct advantages from
having our businesses up and running as separate
units. The action we are planning now will enable
us to build on this.
The greater transparency
of the businesses should also help investors improve
their understanding of each one. They can assess
the dynamics, opportunities and contrasting financial
profiles of each business – and this better
enables them to attribute value to each.
This restructuring represents
a major task for BT, but I’m confident that
we can and will deliver. We’re tackling the
issues that need to be tackled and we’re
moving forward.
Sir Peter Bonfield CBE
Chief Executive
22 May 2001
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