BT Revamps Consumer Offers, Adds Amazon to TV
Jobs-cutting UK operator BT is knocking its consumer division into shape with plans to further integrate its fixed and mobile networks, launch higher-speed services for customers and broaden its content offerings through partnerships with Amazon and other players.
The UK operator, which last week announced plans to cut 13,000 back-office and middle management jobs, said it would finish work on a fully converged network, bringing together, its fixed, mobile and WiFi capabilities, by 2022. (See BT Kicks Off 5G Campaign With Plans for 2019 Launch and BT to Slash 8% of Jobs in Efficiency Drive.)
BT Group plc (NYSE: BT; London: BTA) said the network convergence plan would boost broadband speeds to a theoretical upper limit of 314 Mbit/s for a bigger number of customers. Connection speeds of more than 100 Mbit/s are currently available to just 1 million of the operator's 20.7 million broadband subscribers.
The network overhaul will be accompanied by the launch of a new "BT Plus" service promising customers broadband, mobile and WiFi connectivity on a single plan. Among other things, customers will be able to fall back on 4G connectivity, with usage restrictions dropped, if there is ever a fixed-line fault.
While the operator has been investing in higher-speed broadband technologies including Gfast, a speed boost for customers should come partly from the introduction of "hybrid" technology that fuses fixed and mobile network capabilities.
Another eye-catching move is the tie-up with Amazon, making BT the first UK operator to offer Prime Video services through its set-top boxes.
The operator's TV customers, who can already enjoy services from Amazon rival Netflix with their BT subscriptions, will also be able to access Now TV, an over-the-top service from UK broadcaster Sky, starting in 2019.
The consumer update comes after BT reported a decline in customer numbers at its mobile and TV businesses in the fiscal year ending in March 2018, despite having spent heavily on sports content to attract new subscribers.
BT had 29.6 million mobile customers in March, down from 29.9 million a year earlier, and lost about 10,000 customers at its TV business over the same period, giving it 1.74 million TV customers overall.
The revamp was welcomed by CCS Insight analyst Paolo Pescatore, who was especially enthused by news of the deal with Amazon.
"The move to support Amazon Prime Video positions BT TV as an aggregator of content services including Netflix and Now TV from next year," he said in emailed comments. "We believe that this will turn around its fortunes given that BT TV has recorded losses for the last two quarters and subscriber growth over the last couple of years has been lackluster."
BT has suffered a wave of setbacks in the last year, including an accounting scandal at its Italian business, a worsening of conditions in some of its public sector and enterprise markets and the loss of TV customers. Regulatory authority Ofcom has also threatened tougher regulation of Openreach, BT's networks business, unless service improvements are forthcoming.
Pressure from Ofcom led BT to "legally separate" Openreach from the rest of BT Group last year. Some critics have complained the move does not go far enough and would like to see Openreach run as an entirely separate business.
Today's moves may go some way toward satisfying investors who have been dismayed by the UK incumbent's recent performance. BT's share price fell around 8% on May 10 after BT indicated that about 8% of its 103,600 employees would lose their jobs in the next few years and promised operational improvements.
Pescatore said the strategy update would set a "new course" for the consumer brands led by Marc Allera, but said BT would be under pressure to deliver.
"This growing unit is very well positioned to be a leader in the changing UK multiplay market," he said. "This is a good first step but further changes and tough decisions still await Mr. Allera and his management team."
— Iain Morris, International Editor, Light Reading