Optical/IP Networks

'New Wave' Keeps BT on Track

BT Group plc (NYSE: BT; London: BTA) reported better revenue and profit numbers for its fourth quarter and full financial year today, and announced a new £2.5 billion (US$4.94 billion) share buyback scheme to return cash to its investors. (See BT Reports Q4.)

Revenues of £5.3 billion ($10.5 billion) and £20.2 billion ($39.9 billion) for the quarter and fiscal year ended March 31 were up 3 percent and 4 percent, respectively, while net income was £455 million ($900 billion) for the quarter and £2.85 billion ($5.64 billion) for the year, up 16 percent and 82 percent compared with a year earlier.

The carrier highlighted the importance of its "New Wave" services -- networked IT services for corporate customers, broadband, and mobility -- which accounted for £2.1 billion ($4.15 billion) in sales, about 40 percent of fourth-quarter revenues.

BT also announced a new managed services deal with the U.K. Post Office worth a whopping £750 million ($1.48 billion). The carrier now claims to be Britain's leading broadband service provider with 3.66 million retail high-speed access customers, about 26 percent of the total broadband market (including cable). (See BT Wins Post Office Deal and BT Claims Broadband Leadership.)

BT noted that it now has 1.4 million VOIP subscribers and has installed more than 1 million home gateways in the homes of its broadband customers. That's a statistic worth noting as the firm kicks off its aggressive IPTV marketing campaign. (See BT Pushes IPTV.)

All positive news, especially as BT believes it will continue to increase its revenues by 2 to 5 percent in the current financial year, which began April 1.

But for investors, the edge was taken off those numbers by the revelation that BT's restructuring process, announced a few weeks ago, will cost a whopping £450 million ($889 million), with those charges taken during the current financial year. (See BT Revamps, Creates New Units .)

That news sent the carrier's share price down 6 pence, nearly 2 percent, to 309.25 pence ($6.10) on the London Stock Exchange .

BT's CEO, Ben Verwaayen, told analysts at today's earnings presentation that the restructuring process was part of the next phase of BT's evolution into a new type of carrier. "We're going to be a service provider with global reach, and we're going to be the leading one," he proclaimed, sending out an open challenge to BT's main international rivals, AT&T Inc. (NYSE: T), Orange (NYSE: FTE), and Verizon Enterprise Solutions .

Verwaayen has spoken time and time again about how the 21CN next-generation network rollout is not just a U.K. phenomenon, but a new global infrastructure, one that's going to create a platform upon which services can be delivered quickly, effectively, and to anywhere in the world. (See BT Aims to Finish 21CN in Late 2011, BT Plans Further Global Push, and BT Deploys Ericsson VOIP Gear.)

"We have to create a capability that is truly open… a service neutral infrastructure, that's the 21CN. And we know how to make money out of it, more money than we are making today," added Verwaayen.

— Ray Le Maistre, International News Editor, Light Reading

techomojo 12/5/2012 | 3:08:23 PM
re: 'New Wave' Keeps BT on Track Hi if anyone read the RFP on this they know that the BT 21CN value proposition was nothing but a marketing camapaign.

In he processs of the RFP they killed off their own supplier GPT/Marcon. made an investment in cheap IP gear. BT is lucky that it is the incumben....t if it had to compete no chance.
Mark Sebastyn 12/5/2012 | 3:08:21 PM
re: 'New Wave' Keeps BT on Track I can come down on either side of the argument.

I am told BT killed off their supplier because they didn't build what they needed at the right price. That's no BT's fault.

The real issue is whether 21CN will pay off. It certainly looks like the regulatory changes will force the evolution of a healthier company.

A contrary indicator is the fact Carphone Wherehouse has decided to not buy transit from BT and instead build their own infrastrucuture.


This means either Carphone is not scoping the effort appropriately or BT isn't delivering a cost competitive solution.

Time will tell. Too many moving parts to predict this one.

techomojo 12/5/2012 | 3:08:21 PM
re: 'New Wave' Keeps BT on Track its deeaper than that....
Every 5 years BT comes up with a new spac on the netwrok evolution. 21CN is a the latest new network architecture - recall Sprints ATM plan, Verizon Verison old FSAN before Fios. So its a pure marketing campaign.

Net result the RBOCs have brought NO value to end customers in recent decades and any innovation has no come from them they are reactive not proactive.

As for the GPT/marconi not having the products well I am sure that is an issue but they lsitened to the BT too much IMO.

The BT CEO/CTO come from diffferent worlds and with NO national history they will rape and pillage BT and casue untold damage while still poketing a lot of $$$$$$ ;-)

Mark Sebastyn 12/5/2012 | 3:08:20 PM
re: 'New Wave' Keeps BT on Track How can you call FiOS a reactive move? It's the most proactive thing a telco has done since moving to digital switching.
digits 12/5/2012 | 3:08:17 PM
re: 'New Wave' Keeps BT on Track "a pure marketing campaign"?

I'm not sure that argument carries much weight, to be honest. But depends what you mean. Care to elaborate? DO you think BT is only talking about this transformation instead of actually doing it? Or that the reasons behind the physical network and systems buildout are just hot air that will come to nothing?

Either way I think you are wide of the mark. This network is being built and once it's in place then BT will have no choice but to follow through with its strategy.

What is definitely open for debate is:
- Has BT made the right strategic decisions?
- Can it pull it off?

techomojo 12/5/2012 | 3:08:16 PM
re: 'New Wave' Keeps BT on Track Ray,

I had the opportunity to read the RFP and suprisingly there was nothing "new" about the 21CN. A cheaper vendor and or products do not make a "21CN". Some Capex reduction with as yet unforseen OPEX increases.
techomojo 12/5/2012 | 3:08:16 PM
re: 'New Wave' Keeps BT on Track It is 'reactive' as they are reacting to MSO Triple play - offering with a me too approach.

digits 12/5/2012 | 3:08:16 PM
re: 'New Wave' Keeps BT on Track Well, it IS new in terms of BT's infrastructure.

Sure, it's not using any technology that's new, or ahead of anything anyone else can, and is, deploying. But what **IS** new is that, once (if) completed, the BT network will be radically different from what BT has at the moment.

What it currently has is most definitely a 20th centiury network. And if manages to construct a single, IP-based national network supporting millions of residential, business and wholesale customers, then that would very much be something new and very 21st century.

Now it's all in the execution...
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