Shares in British Telecom fell by over 5% as the company announced plans for a record breaking £5.9bn sterling rights issue to help cut its £30bn debt. Shares in the company had fallen to 539p sterling in London by the market close.
The telecoms giant is also demerging its mobile phone division BT Wireless, likely to include Esat Digifone, in a bid to win back shareholder confidence.
BT has set a price of 300p for the rights issue, the biggest cash call the London market has ever seen. The price represents a 47% discount on the group's closing share price of 568.5p yesterday.
BT said it still planned to sell or spin off its Yellow Pages business, Yell, to further its debt reduction programme. It has also halted dividend payments to shareholders for the time being to help meet its target of wiping £10bn off its debt burden this year.
BT has run up debts of £30bn over the last 18 months, with more than a third being spent on licences for third generation mobile phones in UK and Germany.
The company last week sold off its core assets in Japan, Spain and Malaysia for almost £5bn. It has also announced plans to sell its vast property portfolio in a deal worth around £2bn.
The group's restructuring plans will leave Future BT, a business that will comprise its BT Retail division and Netco, a network infrastructure business.
The spun off BT Wireless business is likely to comprise BT Cellnet and BT's wholly-owned mobile phone subsidiaries Viag, in Germany, Telfort in the
Netherlands, Esat Digifone in Ireland and the Isle of Man's Manx Telecom. BT's mobile Internet portal Genie will also be included in the division.
BT brought forward its full-year results from next week to be released alongside the group's restructuring plans. They showed group turnover rose by 9.1% to £20.4bn. There was a pre-tax loss of just over £1bn.
