Carve-up call adds to BT share misery

TELECOMS group BT is facing calls for it to be broken up. Banc of America Securities argues that separating its household business from its wire network would reinvigorate the group.

The independent report came on the same day that BT shareholders roasted directors for the plunge in BT's share price over the past year (from 251p to 203p) and for lavish board rewards.

Almost 12% of shareholders refused to back BT's pay policies. This largely reflected anger at a £1m relocation and housing grant to chief executive Ben Verwaayen, and at his £2.1m pay last year.

The current regulatory regime prevents BT from abusing its monopoly of the local loop - the connection from the local exchange to households. Banc of America says this encourages BT to focus only on technology that uses these wires, rather than alternatives that may suit customers better.

The separation of its wire network from its retail side would help create clearly defined objectives for each wing. It would also make the costs more transparent and help competition.

Banc of America's Peter Plaut believes the new super media and telecoms regulator Ofcom may begin to push through these changes when it takes over from Oftel at the end of this year. Plaut says its goal should be to encourage innovation rather than simply having more companies use the local loop.

BT chairman Sir Christopher Bland told the annual general meeting Verwaayen's pay was an 'outstandingly good reward for an outstandingly good performance'. The housing allowances were necessary to attract the best talent.

The company said a break-up would lead to under-investment in the network.