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Story URL: http://networks.silicon.com/telecoms/0,39024659,11017301,00.htm

BT to spin off £400m network construction business

By Pia Heikkila

Published: Friday 05 May 2000

BT is spinning off its network construction business as a part of the restructuring plan announced earlier this year.

The telco is to separate Networkbuild - which builds network infrastructures for its voice, data and mobile services - from its operations, either by flotation or management buyout.

Peter Crowcombe, European networks expert at research consultancy, Infonetics, sees the separation as a natural progression for the company. "With the local loop unbundled and other organisations using BT's network, the company is looking to create more business by selling its construction services to the competitors," he told silicon.com.

Katja Ruud, analyst at Dataquest, said: "BT is moving with the times. An incumbent telco will benefit from channelling its efforts into smaller ventures because it will allow the individual enterprises to grow separate from the main corporation."

Eric Owen, research director at IDC, said the proposals form a part of BT's expansion plans. "BT is burdened by the ownership of network, which in the current economic climate devalues the company. It makes sense for the company to split into smaller units in order to grow."

BT announced a major restructuring strategy in April, which included a plan to float its Yellow Pages directory operation.

The value of the flotation is undisclosed but estimates put its value at over £400m.