British Telecommunications shareholders today voted to demerge its mobile unit, clearing the way for a separate listing and possible takeover of Europe's sixth-largest wireless group. BT owns Digifone in Ireland.
BT said in a statement that over 90% of its shareholders had voted for the move. Analysts expect the new mobile company, named mm02, to be worth as much as $10 billion when it takes up a separate London stock market listing on November 19.
The demerger will split BT's mobile business from its fixed-line operations where it remains the dominant player in Britain despite competition from cable. BT has been restructuring in recent months after running up huge debts, inflated by the purchase of expensive licences to operate new mobile phone services.
Chief Executive Peter Bonfield said the creation of two separate FTSE 100 blue chip index companies would allow each to pursue their own strategies, with mm02 representing a higher growth investment and BT Group a stable, cash-generative company which should be able to pay dividends.
Existing BT shareholders will receive one share in mmO2 for every share they own in the parent company as part of a restructuring intended to boost shareholder value. MmO2 will begin life with only £500 million debt, giving it one of the strongest balance sheets in the wireless industry, though borrowing will rise quickly as it builds costly third-generation networks.
The parent group has around £17.5 billion debt, although this is down by £10 billion since March following a rights issue and the sale of peripheral assets.
Many analysts expect the demerged mmO2 to be bought by Telecom Italia Mobile or Spain's Telefonica Moviles, as it competes with British rivals backed by continental European giants like Orange, the mobile arm of France Telecom, and Deutsche Telekom's One 2 One. Analysts say smaller European operators will try to combine their strengths to wrestle with the big players, which also include Britain's Vodafone.
BT's wireless divisions - Cellnet in Britain, Viag Interkom in Germany, Telfort in the Netherlands and Digifone in Ireland, with a total of almost 17 million active customers - will adopt the O2 brand starting early next year.
