BT break up: You ain't seen nothing yet

BT's plans for dismemberment and continuing management cuts are only the beginning of the end of the telco as we know it, according to analysts. Less polite pundits are already saying its plans - announced earlier today - are 'too little too late'.

Sir Peter Bonfield this morning proclaimed the creation of a new 'lean and focused' holding company, BT Group, and the inception of a new arm, NetCo, to focus on the needs of the other licenced operators, including BT Retail and BT Ignite. Up to 25 per cent of BT Wireless and Yell will go public in the second half of next year. Bonfield added that the headquarters cull, first announced this April, had seen 3,000 jobs go already, with a total of 5,000 planned for the end of the year. Another 5,000 will be lost in the near future. Bonfield said that the split-up should cut down on the need for much interference from Oftel. But Oftel has replied by saying it will be examining the plans in detail and will not hesitate to call for industry and consumer consultation before giving BT the green light. The Communication Managers Association (CMA) has been hammering Oftel for years about BT's monopolistic position in most of the country - especially in Scotland - because it feels that this raises prices for both businesses and consumers. David Harrington, director general of the CMA, said: "It comes as no surprise that BT sees this as its chance to get out from under Oftel, at least partly. We shall be watching closely." However, Bhawani Shankar, telecoms analyst at the Gartner Group, said: "Getting away from Oftel is only a part. They have spent billions on mobile phone operations and research and time, and haven't earned a dollar. "As this was at the time of the stock market correction on telecoms stocks, the move is in direct reaction to the market. Sell equity and generate more cash. Unlike the Dutch, German and French operators they don't have a strong enough internet arm to spin off. "More could be done and you will see more and more in the next months." BT hopes its latest initiatives will cut its escalating debts by as much as £10bn. The company's is set to be in the red to the tune of £30bn by next year. It has spent £7bn this year alone on mobile operations. Its credit rating was cut to a single A earlier this year with threats from the rating agencies of more to come. The company has said that it is in discussions with Vodafone to sell off its 17.8 per cent stake in Spanish mobile operator Airtel, but has said it will keep its stake in Cegetel, France's second biggest mobile company. It expects to get around £5bn when it sells a quarter of BT Wireless.