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During
the 2002 financial year, we substantially completed
a radical restructuring programme, the key elements
of which were:
-
the UK’s largest-ever rights issue – 1.98 billion
new shares were issued to shareholders who took
up their rights, raising £5.9 billion, net of expenses
-
the demerger of the majority of BT’s mobile businesses
to create two separate listed companies – BT Group
plc and mmO2 plc
-
the
disposal of significant non-core businesses and
assets
-
the unwind of Concert, BT’s joint venture with AT&T
-
the creation of customer-focused lines of business
- a
major programme of debt reduction.
Demerger
of mmO2
On
19 November 2001, we completed the demerger of mmO2,
comprising what were BT’s wholly-owned mobile assets
in Europe: O2 UK (formerly known as BT Cellnet), O2
Communications (Ireland) (formerly known as Esat Digifone),
Telfort Mobiel, Viag Interkom, Manx Telecom and Genie.
Shareholders received one share in mmO2 plc
and one share in BT Group plc for each share they previously
held in British Telecommunications plc. Trading in BT
Group plc and mmO2 plc shares began on 19
November 2001.
BT
and mmO2, through arm’s length negotiations,
entered into a number of agreements to define the continuing
relationship between the groups, including the agreement
that, until November 2004, we will exclusively promote
the mobile products and services of O2 UK to the business
market in the UK.
The
agreements that we would not offer mobile products and
services to the consumer market in the UK solely under
the BT brand, and that parts of mmO2 were
able to use some of our trademarks and brands on a transitional
basis, both lapsed on 31 March 2003.
Acquisitions
and disposals
Between
the 1999 and 2002 financial years, BT made a number
of significant acquisitions, including taking stakes
in Japan Telecom and J-Phone Communications in Japan,
and control of Viag Interkom in Germany, and Esat Telecom
and Esat Digifone in the Republic of Ireland. During
the 2002 financial year, reflecting the change in the
group’s strategy, we disposed of a number of businesses
and assets, including Yell – our international directories
and e-commerce business –and our stakes in Japan Telecom,
J-Phone Communications and Airtel, the Spanish wireless
operator. The consideration received enabled us to focus
on our core businesses and to reduce net debt.
In
January 2003, we completed the sale of our 26% stake
in Cegetel Groupe SA, the leading alternative fixed-line
operator in France, to Vivendi Universal for £2.6 billion
in cash. After accounting for goodwill written back
from reserves, BT realised a profit of approximately
£1.5 billion before an exceptional interest charge of
£0.3 billion on closing out fixed interest rate swaps.
In
the 2003 financial year, we disposed of a number of
non-core investments, including stakes in BSkyB, Mediaset,
Blu and SmarTone.
No
material acquisitions were made in the 2003 financial
year.
Property
In
December 2001, as part of our wider property outsourcing
arrangement, we completed the sale and leaseback of
the majority of our UK property portfolio to Telereal,
a 50/50 joint venture partnership between Land Securities
Trillium and the William Pears Group, for £2.4 billion
in cash. Approximately 6,700 properties – offices, telephone
exchanges, vehicle depots, warehouses, call centres
and computer centres –equating to approximately 5.5
million square metres, were transferred. Under these
arrangements, Telereal is responsible for providing
accommodation and estate management services to BT.
We
retained direct ownership of approximately 220 properties
– including certain telephone exchanges, computer centres
and high radio towers –totalling some 800,000 square
metres. We also retained BT Centre, our headquarters
building, Adastral Park, our major research facility
near Ipswich, Madley and Goonhilly earth satellite stations
and the BT Tower in Central London.
In
the third quarter of the 2003 financial year, we provided
£198 million against the costs of vacating and disposing
of surplus London offices, as we rationalise from 14
buildings to five.
Concert
On
1 April 2002, we completed the unwind of Concert, our
international joint venture with AT&T, which involved
the return of Concert’s businesses, customer accounts
and networks to the two parent companies.
As
a result of the unwind, we have largely taken back into
our ownership those parts of Concert originally contributed
by us to the joint venture, while AT&T has taken
back into its ownership those parts it originally contributed.
We have acquired substantially all of Concert’s managed
services network infrastructure in Europe, Africa, the
Middle East and the Americas, and substantially all
of the customer and supplier contracts that we originally
contributed to Concert. Concert assets that have been
returned to us are now managed by BT Global Services
while Concert customers that have been returned to us
are now managed partly by BT Global Services and partly
by BT Retail.
Simultaneously
with the completion of the termination of the Concert
joint venture, AT&T acquired BT’s share of our Canadian
joint venture, through which we held an indirect minority
shareholding in AT&T Canada. As a result, BT no
longer has any obligations in relation to AT&T Canada.
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