Unions protest against BT's wireless sell-off

Unions fear that splitting mmO2 off will lead to thousands of job cuts, but it looks like investors will approve the plan
Written by Graeme Wearden, Contributor

Crowds of demonstrators greeted the BT shareholders who gathered at the Birmingham National Exhibition Centre on Tuesday morning to decide whether to approve the demerger of the company's wireless operations.

Both the Communication Workers Union (CWU) and some BT staff are unhappy with the idea of selling off mmO2, formerly known as BT Wireless. Protestors, one of whom donned a Grim Reaper costume, appealed to shareholders to block the move amid claims that thousands of jobs were at stake.

There are even fears that mmO2 would be a tempting takeover target. "If the wireless division is separated from the rest of BT then it is highly likely to be merged or taken over, and that would certainly lead to job losses," a CWU spokesman told ZDNet UK recently.

The CWU has been fighting the split for some time. It believes that BT is making a big mistake in cutting off its mobile operations from its fixed network business. "This demerger would be a tremendous backward step. There has been a whole generation of youngsters who have taken up mobiles almost overnight. That is not going to go backwards," said the CWU's deputy general secretary Jeannie Drake this morning.

Many of BT's shares are owned by city institutions. The CWU has been attempting to persuade these firms that they should tell BT to stop the split. However, reports suggest that the union has been unsuccessful. One fund manager has told the Daily Telegraph that he will be voting in favour of the demerger. A decision is expected sometime on Tuesday afternoon.

There was speculation recently that Japanese mobile giant NTT DoCoMo might be inclined to snap up the demerged mmO2. DoCoMo is thought to be very keen to launch its successful I-mode service in Europe. Currently, its only foothold in the UK mobile scene is its 20 percent share of Hutchison 3G.

BT announced its intention to demerge its wireless operations earlier this year, when it was under considerable pressure to reduce its debts -- which at one point came close to £30bn. The company denies that it is just seeking a cash boost, and insists that splitting the mobile arm from the rest of the company will allow both sides to concentrate on their respective markets.

Existing investors will receive one mmO2 share for each BT share they own. American city firm Goldman Sachs predicts that mmO2 will float on the stock market at around 70p -- which some experts believe would be low enough to encourage a takeover attempt.

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