BT has unveiled its most dramatic reshaping since privatisation, with a partial break-up the business into four separately listed companies.

The restructuring will see 5,000 people leave the company this year, and similar numbers each year after that.

Key to the reforms will be the creation of a new phone network company called NetCo focusing solely on running the phone network. It will provide services to BT Retail, the consumer telephone arm of BT, Internet and data services division BT Ignite, and to rival telecoms operators using the BT network.

The precise shape of NetCo has yet to be defined and discussions will take place about this with telecoms regulator Oftel.

Once this is achieved, BT intends to float off 25 per cent of the business as a separately listed company.

BT will also spin off up to 25 per cent of its BT Wireless mobile phone operation - which includes BT Cellnet in the UK - in the second half of the next financial year.

This will be followed by a similar spin off of Yell, its Internet Yellow Pages directories arm.

Chief executive Sir Peter Bonfield said the reshaping was "no less dramatic in its way than the original privatisation back in 1984".

The plan was a "radical and unprecedented restructuring of the business", he added.

The moves however received a mixed reception in the City, where commentators said the telecoms giant needed to split completely if it were ever to turn itself around, and questioned whether Sir Peter and chairman Sir Iain Vallance, werew the men to do it.

Since privatisation, BT has shed 125,000 employees and in February announced that it planned to shed 2,800 managers this year.

BT said yesterday it had achieved this target and now aimed to see a further 2,000 people leave by the end of the year, although it stressed they would all be voluntary redundancies.

BT hopes to have reduced its debt by about £10bn by December 2001. Pre-tax profits in the six months to September 30 slipped to £1.03bn, against £1.66bn for the same time in 1999.

BT shareholders will pick up a half-year dividend of 8.7p, although BT hinted there could be a drop in future dividends as a result of the restructuring.

l BT yesterday confirmed that the announcement would have no bearing on its closure-threatened depot in Northallerton. The future of the site, and its 180 employees, hangs in the balance with the results of a review expected in December