Unions brand BT demerger as “insane”

The Communication Workers Union (CWU) has mounted an eleventh hour bid to save BT from inflicting “insane” damage on the company by a demerger.

The union lobbied Tuesday’s extraordinary meeting of BT shareholders at the NEC in Birmingham in a determined bid to highlight the dangers of a demerger scheme that would spell the end of BT as an integrated telecoms provider.

The CWU has been calling on top managers and administrators to reconsider the split up of the British telecommunications giant into two separate companies, a move that will separate the fixed line business from the high-growth potential mobile division.

CWU deputy general secretary Jeannie Drake said: "This is like no other dispute in the history of the trade union movement. It has nothing to do with pay or conditions - simply a genuine desire to stop the company inflicting terrible long-term harm on itself where there is no commercial justification.

Although the opposition to the demerger is unlikely to succeed, the unions are not isolated in their prediction of danger ahead for BT; some analysts are concerned that divestment may reduce shareholder value. The unions are worried that mmO2 will be vulnerable to takeover in a mobile market sector that is likely to see further consolidation and that BT, bereft of the growth potential from a mobile wing, will no longer be able to exploit opportunities that integrated telecom companies will be able to enjoy.

Under the demerger, two holding companies, BT Group and mmO2, will be created. The BT Group will be comprised of BT Retail, BT Wholesale, BTopenworld, and BT Ignite. The second holding company, mmO2, will be made up of BT Cellnet, Digifone (formerly Esat Digifone), Telfort Mobiel, Viag Interkom, Manx Telecom and Genie (SP)