BT: Ringing up the debts

By CNN's Liz George

LONDON, England -- With British Telecom's debt burden topping $42 billion shareholders are stepping up pressure for a clear plan of action.

Board members were due to gather on Tuesday for a regular meeting and it was expected they would be the target of intense criticism and, in some cases, calls for resignations.

But the meeting was called off. Sources say the cancellation was due to the overwhelming media focus on the meeting.

Pricey licenses for third generation mobile phone networks and stakes in overseas companies are mostly to blame for the debt load.

There have also been difficulties launching the new 3G technology which delays return on its cash outlay.

Like it's rivals, BT has a plunging share price, falling over 64 percent since the beginning of the year amidst a general nervousness in the technology and telecom sector.

BT shareholders are worried, and one analyst says they have good reason.

"If the company were to continue in the way it is going it is possible it could run into difficulties so we can't write that out -- but frankly it is unlikely," said John Tysoe of WestLB Panmure

"I think the worry for investors is that they can't see an end to this process. They see that the level of debt has risen and risen yet BT seems not to be doing anything about it."

But despite pressures to spin off parts of its business, like its wireless operation, BT remains steadfast, saying it is not going to sell assets at bargain basement prices.

France Telecoms' disappointing float of its mobile arm, Orange is a case in point with the offer price lowered time and again -- and it has still lost ground ever since. 3G is a technology which will eventually arrive and mainstream phone firms know they need a presence now.

BT really has no option but to swallow the huge interest payments, and hope 3G arrives sooner rather than later.

Hard times seen for European wireless
January 8, 2001

BT

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