BT debt reduction 'on track'

BT claimed today that the restructuring and debt slashing strategy it announced late last year is still on track.

But analysts were somewhat less upbeat, saying that the telecoms company now needs to reassure the markets and provide more details about its plans to float part of its wireless business. The public offering is scheduled for the second half of this year.

BT's financial director Philip Hampton said he expected the flotation of BT Wireless, and an initial public offering (IPO) of the company's 17.8 per cent stake in Vodafone's Airtel, to raise between £5bn and £6bn.

This would help the telco towards its goal of reducing debt by about £10bn, which Hampton claimed was going according to plan. In its third-quarter financial statement, BT projected that it will have borrowed about £30bn by the end of this financial year.

Tony Lavender, principal analyst at research company Ovum, said: "Now [BT] has its restructuring plans in place at the highest level, everyone is looking for an indication that the idea of floating businesses such as its wireless division are going well."

"It does appear to be doing everything it can to reduce debt. From a financial point of view, it looks like it's doing the right thing. But everyone wants to know how it's going to float this business in a climate that is certainly not favourable at the moment - for example with the reduction in Orange's IPO price," he added.

BT's earnings per share for the nine months ending 31 December 2000 were 17.2p, including exceptional charges and goodwill amortisation of 0.3p per share. Income before these items was 17.5p per share compared with 25.8p per share in the same period a year ago.

Group turnover grew by 7.4 per cent to £15m, mainly as a result of acquisitions in Europe and from the money BT charged other operators to interconnect with its exchanges.

Lavender said: "I think there are no real surprises in BT's earnings. Although volume is growing, if you look at earnings before interest they are pretty much flat."