British Telecom Internet reorg forges ahead

By separating its mobile and Internet assets into autonomous units, BT hopes to cash in on the e-revolution. But is it already too late?

In the latest milestone toward British Telecom's (quote: BT) planned massive restructuring, the incumbent telecommunications provider has called in American investment bank Morgan Stanley Dean Witter as an adviser. Morgan Stanley joins BT's traditional merchant bank advisers, NM Rothschild.

The reorganisation, results of which are likely to be announced before BT's annual earnings come out next month, is expected to include a spinoff of the group's Internet and mobile properties into their own business units. That would prepare those businesses -- which include BTClick, BT Interactive, BT Internet and BT Cellnet -- for potential stock market flotations.

BT has come under fire for being too slow to take advantage of the new e-economy; the group hopes the reorganisation will make its component parts more visible to investors, boosting the company's share price. But it may be a matter of too little, too late as UK and Continental competitors continue aggressive expansion. The UK's largest ISP is currently Freeserve, which first popularised a subscription-free business model with revenues coming from phone charges.

In the mean time, it has come to light that Albacom, an Italian telecoms company of which BT is part owner, will float later this year; BT's 23 percent stake could be worth up to £690m. The other main investors are Mediaset, ENI and Banca Nazionale del Lavoro.

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