BT ... down but not out

Guardian update

11.30am update

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BT sells stake in SmarTone

Mark Tran
Tuesday December 31, 2002

BT today announced the sale of its stake in SmarTone, a Hong Kong mobile carrier, as it continues to sell non-core assets in a bid to whittle down its
debt.
BT is to receive HK$1bn (£70.9m) from Sun Hung Kai Properties, a Hong Kong developer, for its 121.2 million shares in SmarTone, about a third of what it paid for the stake in 1999. BT initially paid HK$25 a share for a 20.1% stake in SmarTone, later increasing it to 20.8%.

"The transaction, which is expected to complete in January, is part of BT's disposal of non-core assets and another step in its debt reduction programme," BT said in a statement.

Earlier this month, BT agreed to sell its 26% stake in Cegetel, the French telecoms company, to Vivendi Universal, the media giant, for 4bn euros (£2.6bn), dashing the hopes of Vodafone, the British mobile phone operator, of boosting boost its presence in France.

BT sold its stake in SmarTone after Sun Hung Kai raised its offer price for Hong Kong's third largest mobile operator by 3%.

The acquisition of BT's stake will give Sun Hung Kai nearly 51% of SmarTone. BT has been trying to get rid of its stake in the Hong Kong mobile carrier for the past couple of years.

BT last month announced a 55% rise in profits to £496m for the three months ending in September. Underlying earnings increased 7% to £1.5bn as cost savings came in well ahead of analysts' expectations.

But BT 's chief executive, Ben Verwaayen, admitted that the market had made a mockery of some of his forecasts. BT has ditched its April target of increasing revenues by 6% to 8% when growth was closer to 2% after two quarters.

Last year, BT was forced into the largest rescue fundraising in British corporate history to pay down its debts, which at one point reached £30bn. In April, BT set itself the target of cutting its debts to under £10bn. BT debt now stands at about £11bn.