Shareholders and analysts said a demerger of subsidiaries such as its mobile operator Cellnet or its British Internet services could pull its shares out a slump that have left the former UK monopoly vulnerable to a bid. "It's gone from having a premium rating to a discount rating in the sector and a lot of that's got to do with management credibility," said Ollie Beckett, a fund manager at Henderson Investors. "They've reached the stage where they need to do something." That something should be a spin off of Cellnet, Yellow Pages or its Concert international joint venture with AT&T.

Separate market listings for those units would restore value to BT's stock and give it shares it could use to finance takeovers, Beckett said. BT refused to comment on a report on Monday that it was considering a separate listing for the three businesses. Chief Executive Peter Bonfield said BT's preference was for clearer reporting of its divisions.

-- (Reuters)