One of the UK's greatest internet boom and bust stories came to an end yesterday as BT bought out online directories business Scoot.com for just £5m, a fraction of what the company was worth two years ago.
The news is a blow to Yell, the owner of Yellow Pages, which BT sold a year ago and which its venture capital owners are hoping to float next month.
BT intends to use Scoot to re-enter the printed directories market and is also understood to be considering a bid for the Thomson directories business owned by Italy's Seat Pagine Gialle.
Yesterday Pierre Danon, the head of BT's retail business, warned there might be "significant" job losses if BT did not take steps to support its position in the newly deregulated 192 directory inquiries market by branching out into other directories businesses.
"I have to use deregulation to my advantage. It allows other people to come into my market and also helps me to reach outside my market, and the biggest area outside my market is classified directories."
Mr Danon intends to unveil his new directories strategy late next month. It will include telephone, internet and printed directory services.
Yell, however, said it was unperturbed by the return of its former parent to the market. The company believes that it will take several years for BT to get a sizeable position in the market.
"BT used to describe us as the jewel in the crown. We do not necessarily welcome competition but we are prepared for it," said a spokesman.
But the news comes at a bad time for Yell as the company tries to convince investors that it is worth the £3.5bn price tag it is targeting.
Ironically it was BT that gave Scoot its start in life by selling Freepages the 0800 192 192 number for next to nothing. Using the business built around that number, former chief executive Robert Bonnier reversed Freepages into a listed shell in 1996 and founded Scoot.
The company went on to buy classified adverts paper Loot for almost £190m from its entrepreneur owner, and at the height of the dotcom boom it was valued at over £2bn.
But a cash squeeze and the tremendous fall in the company's stock price forced out senior management - including Mr Bonnier - and in a desperate dash for cash, Loot was sold just under a year ago for only £45m.
Yesterday BT bought what remains of Scoot for £5m in cash and picked up the firm's £3.2m debts. Scoot said that if shareholders do not back the deal it will go bust.
