BT cash call could mean Vallance out

Analysts and fund managers, including leading BT shareholders, said that a rights issue was becoming a serious possibility as poor stock market conditions scuppered other means of lowering debt.

In order to meet its 10bn debt-reduction target, BT will have to demerge or float assets including its mobiles business, BT Wireless, or sell minority stakes in overseas ventures. Alternatively, it could call on shareholders for cash.

Uberto Ferrari, executive director of European telecoms research at UBS Warburg, said that there was a reasonable chance of a rights issue but it would have to come with senior management changes.

Some investors would like to see the removal of Sir Vallance and possibly the chief executive, Sir Peter Bonfield. Philip Hampton, the newly appointed finance director, has impressed City of London investors in recent months and is viewed as a successor to Bonfield.