BT's week of hell: Bonfield's last supper?

Following tomorrow's dinner BT is expected to renege on its plans to float 25 per cent of BT Wireless.

According to the Financial Times, the debt-ridden telco is prepared to sacrifice its credit rating rather than harm shareholder value. The FT quotes the company as saying: "Clearly the focus must be on not destroying shareholder value by selling assets below their true worth for the sake of a credit rating."

It is understood investors will tell chief executive Sir Peter Bonfield that floating BT Wireless in current market conditions would be 'value-destructive'.

Bonfield too could be the victim of BT's troubled times with the City calling for his head - along with that of chairman Sir Iain Vallance - if it is to endorse a cash call.

Philip Hampton, finance director at BT, indicated last week that he is against the flotation, preferring the rights issue which would give BT's 1.8 million shareholders the opportunity to buy new shares at a largely discounted price.

BT debt is scheduled to reach £30bn by the end of this month and the company has promised to reduce its debt by £10bn by the end of the year. However, following Orange's depressing IPO and parent company France Telecom having its credit rating cut by agency Standard & Poor, a £5bn rights issue is looking more and more like BT's best option.

Hampton said: "If we are going to raise a lot of money, we have to write a convincing prospectus on the future of the business."

Standard & Poor, with whom BT are scheduled to meet in early April have threatened to downgrade its credit rating unless it can divulge an 'adequate debt reduction strategy'.