BT set for wireless spin

British Telecommunications’ spin-off mmO2 will start life with a lighter balance sheet than Wall Street expected. BT today announced that only $720 million of the parent company’s $17 billion debt load will be allocated to the wireless unit. In previous statements, BT said the demerged unit would shoulder as much as $2 billion of debt.

A large chunk of BT’s debt was created by heavy spending for third-generation wireless licenses in Europe. BT has sold numerous assets to reduce that debt from its $39 billion high-water mark at the beginning of the year. By apportioning to mmO2 a minimal amount of debt, BT hopes to buoy the unit’s upcoming trading debut and give the unit more flexibility in future fund-raising.

If shareholders approve the wireless spinoff at a special meeting on October 23, wireless shares will begin trading on November 19, according to a timetable released today by BT. The spin-off also requires the approval of British courts.

BT’s wireless group, which includes BT Cellnet, Viag of Germany, Esat in Ireland, and Telfort in the Netherlands, was renamed mmO2 on Monday. A new consumer branding campaign will be rolled out next spring.