BT (NYSE: BT) has dismissed rumors that it has plans to sell or spin off its Global Services subsidiary despite a call by its shareholders to offload it.
According to a report in The Telegraph, the service provider has held a number of internal talks about a potential sale that could raise nearly $15.6 billion.
However, the service provider said in a statement over the weekend that it is committed to growing the Global Services business.
"BT has no plans to sell its Global Services division," BT said. "It is a much improved part of the business and we are pleased with the continued progress it is making."
A number of BT's shareholders said they support the idea of shedding the Global Services subsidiary.
"We've been wondering about the future of it for a while," one shareholder told The Telegraph. "We'd be supportive of a demerger because we think the stock market would value Global Services at a much higher multiple and we tell management every time we see them that we'd like to see them do it."
One of the issues that has plagued the Global Services division was the rapid expansion of the subsidiary under former CEO Ben Verwaayen, which led to two profit warnings that in 2009 took BT to its lowest share price since privatization. The service provider has cut costs and reorganized it to increase efficiency of the unit over the past five years.
During its second quarter, Global Services' revenue declined 5 percent to $2.64 billion due to what it says is an impact from foreign exchange movements. Meanwhile, a decline in public sector revenue in the UK was partially offset by higher underlying revenue in high-growth regions around the world.
Other shareholders said they are concerned that a sale of the Global Services subsidiary could cause various issues because it has crossover with parts of BT's domestic market in the UK.
For more:
- The Telegraph has this article
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