Debt-laden British Telecom yesterday moved to raise the profile of its new chain of "internet hotels" amid speculation that it could spin off the unit in an effort to boost its flagging share price.
Ignite Content Hosting, the corporate internet arm set up after BT's strategic reshuffle in April, now has 20 web hosting and data centres open for business across nine European countries, BT announced.
The network has been funded to the tune of £1.25bn by BT, US carrier AT&T and Concert, the joint venture between the two. They aim to build 44 centres to give their large multinational customers worldwide access to integrated web hosting and application service provision (ASP).
Internet hosting is one of the telecoms sector's fastest growing markets as businesses' internet demands become more sophisticated and they increasingly look to rent software over the net rather than install it in their computers.
Analysts say web hosting has become a vogue area among investors, so many believe BT will look to crystallise the value of the venture and reduce debt by eventually floating off Ignite.
"It's being looked at now but nothing has been ruled in and nothing has been ruled out," admitted Ignite's Keith Langridge.
BT refuses to give details of how much of Ignite's £1.25bn funding it is providing or what its shareholding in the venture is. Mr Langridge said BT's commitment was to develop the European centres, while AT&T looked after the American build and Concert oversaw Asia-Pacific development.
Internet hotels in Amsterdam, Manchester, Frankfurt and Dublin have recently gone live as Ignite vies for leadership in a market forecast to grow from $4bn in 2000 to more than $16bn in 2004.
Telecity is the largest data centre specialist listed on the London Stock Exchange and has seen its shares soar since its July flotation. The firm operates nine centres across Europe and is now worth more than £1.4bn.
BT, by contrast, has seen the value of its shares fall by 45% in the past six months and significantly underperform the wider telecoms sector. Investors have become alarmed by the debt it has accrued.
