British Telecommunications

By the time you read this, turmoil at British Telecommunications may have cost CEO Sir Peter Bonfield his job.

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By the time you read this, turmoil at British Telecommunications may have cost CEO Sir Peter Bonfield his job. Last November, when Bonfield detailed the second phase of BTs restructuring, he predicted "radical change" for the carrier, which posted $29.5 billion in revenue in financial year 2001. Did the change he envisioned include a new CEO?

Struggling under the weight of $40.3 billion in debt, BT last month unveiled plans to split itself into two companies: BT Wireless and Future BT, and reported a $1.4 billion year-end loss, its first in its history as a public company. BT also suspended dividend payments and announced an $8.4 billion cash call.

But Bonfield was already in trouble. Initiatives to raise cash earlier this year were stymied by uncooperative capital markets. Slowing growth made unattractive targets of the units BT hoped to divest. In April, the financial press started clamoring for Bonfields blood, but settled for the head of Chairman Sir Iain Vallance. And in May, BT delayed the launch of the worlds first commercial third-generation mobile network.

Still, all the news has not been bleak. Sir Christopher Bland, the companys new chairman, has marshaled the debt-slashing sale of assets worth $10.1 billion and is reportedly negotiating the $4.3 billion sale of its stake in Groupe Cegetel to Cegetel parent Vivendi Universal.

BT must adjust to a world in which its biggest customers are also its fiercest rivals. Its U.K. wholesale business is projected to more than double in revenue over five years, with more than half of BTs network traffic originating with other licensed carriers.

On the retail side, BT remains strong. The company, Bonfield says, is just beginning to tap the potential of its investment in broadband networks; retail voice and data traffic can now be routed straight onto the Internet Protocol backbone; and the companys unmetered voice and Internet services at bargain prices have attracted more than 8 million customers.

"Im a decentrist at heart," Bonfield says. Time will tell if hell be around to prove it.