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O2 makes BT breathe easier – for now

Telco spins off Cellnet as rivals offer 'free' calls

BT today announced it is to rename its wireless division — which includes mobile operator BT Cellnet — mmO2, and will brand the service 'O2' when the division is spun off into its own company later this year.

According to BT's spokeswoman, the title O2 has no particular meaning, though the 'mm', "could stand for multimedia or the mm, in Roman numerals could stand for 2000," she said.

On the surface, BT's name change appears to mirror recent moves by UK mobile telco One2One, which is to call itself after its German parent company T-Mobil, and rival Vodafone's plans to gather its various divisions under a single brand.

But BT's rebrand is more than cosmetic, masking efforts to reduce the company's massive debt.

Since May this year, BT has reduced its £29bn arrears to around £17.5bn, in part through the sale of its online and print business directory operation Yell, and the sale to competitor Vodafone of assets in Spain and Japan.

And with the launch by operators One2One and Orange of a 'free' mobile service, there could be more financial battles ahead for the beleaguered telco.

For £25 a month, One2One customers can enjoy 100 toll-free minutes of calls to mobiles and landlines in the UK. Orange has come up with a similar deal, this time offering up to 200 minutes of local calls, and experts predict that such price wars could put other telcos' revenues in jeopardy.

The move by the two companies comes just six weeks after the offices of the major UK mobile operators were raided by EU officials investigating price-fixing allegations.

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