BT Ramps FTTx Plans, Turns a Profit

BT Group plc (NYSE: BT; London: BTA) flooded the market with news today as it outlined some of its strategic targets for the next three years, including an acceleration of its next-generation broadband and TV service plans. It also announced a small investment in a cloud-based games firm. (See BT Outlines 3-Year Plan.)

That news came as BT announced a profit for its full financial year, but its annual revenues are down, and will continue to fall for the next few years. In addition, the carrier noted that the costs associated with the restructuring of its problem child, BT Global Services , will be £55 million (US$81 million) higher than previously expected. (See BT Reports Q4.)

There's a lot to digest, here are the highlights in handy snack form.

  • BT's business is shrinking. In its full financial year to March 31, BT generated revenues of £20.9 billion ($30.7 billion), down 2 percent from the previous year. The carrier said that's better than expected.
  • Revenues for the current fiscal year (to March 31, 2011) are set to drop again, by about 4 percent to around £20 billion ($29.4 billion). And it's going to be a while before the ship gets turned around. The carrier says that while "underlying revenue trends" are set to improve during the next few years, actual revenues aren't expected to start growing again until 2012/2013.
  • Profits (before tax) are back, though, at £1 billion ($1.47 billion) for the fiscal year, compared with a loss of £244 million ($359 million) in the previous year.
  • BT was able to make money, and reduce its debts, by cutting back its annual costs by £1.75 billion ($2.57 billion), about 9 percent.
  • Some of those savings have come from a higher than expected reduction in headcount. BT had planned to cut 15,000 positions in the 2009/2010 financial year but ended March with 128,000 staff, down 20,000 from a year earlier. (See BT Cuts Jobs, Capex .)
  • Investors like lower costs and profits, especially when they're not expected. BT's share price is up by more than 11 percent in London today to 134 pence ($1.97).
  • Restructuring the Global Services division, though, is proving more costly than first predicted. The carrier has already incurred £301 million ($443 million) in charges and now expects the total to reach £475 million ($699 million). "The increase reflects the complexities associated with our restructuring programme," notes BT. Cor Blimey!
  • With its cost base now lower, BT's able to commit more money to its next-generation broadband plans, which is a mix of fiber-to-the-home (FTTH) and fiber-to-the-curb (FTTC). The operator is pledging a further £1 billion to the rollout, taking the total to £2.5 billion ($3.67 billion), so that two thirds of British homes and businesses will be within reach of what it calls "superfast" broadband by 2015. The operator recently launched its BT Infinity broadband service, which offers downstream speeds of up to 40 Mbit/s, but some of its rivals are more than matching BT's moves. (See BT Launches Infinity Broadband, BT Ups Its FTTP Target, and Virgin Preps 100-Mbit/s Broadband Launch.)
  • It's also going to invest more in BT Vision, its hybrid (delivery over broadband and via a rooftop aerial) TV service, which currently has 467,000 users, and build out its Global Services capabilities, especially in Asia/Pacific, where it thinks the international division can pick up some significant new business. (See BT Sticks With Microsoft for IPTV.)
  • BT is to take a 2.6 percent stake in Californian cloud gaming specialist OnLive Inc. , which will provide online gaming services to BT broadband customers in the U.K. (See BT to Invest in OnLive Inc.)
  • BT's CEO Ian Livingston needs a new script writer. Today's takeaway quote -- "We are on track with our goal of creating a better business with a better future" -- sounds like it's been plucked from the recent UK general election, which was notable for its talking-a-lot-but-saying-nothing soundbites.

    — Ray Le Maistre, International Managing Editor, Light Reading

  • paolo.franzoi 12/5/2012 | 4:36:22 PM
    re: BT Ramps FTTx Plans, Turns a Profit


    The news report you posted listed a shift from 15k people gone to 20k people gone leaving a total staff of 120.

    Incrementally it is a 5K person extra layoff or going from about a 10% layoff to about a 15% layoff.  Heavy, but not completely insane.



    digits 12/5/2012 | 4:36:22 PM
    re: BT Ramps FTTx Plans, Turns a Profit

    That's a lot of cost taken out of BT -- can a carrier have 20,000 fewer people working for it in the space of 12 months and not suffer somewhere along the line? Or was BT just so over-staffed?

    I notice as well that 21CN didn't even get a name-check in today's announcement... 

    stephencooke 12/5/2012 | 4:36:21 PM
    re: BT Ramps FTTx Plans, Turns a Profit


    In the UK FTTC = Fibre-To-The Cabinet = Fibre-To-The-Node (FTTN) in NA, FTTDP (Fibre-To-The-Distribution-Point) = FTTC in NA.


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