Wednesday, November 9, 2005

BT Reports Growth in New Wave Service, 6.2 Million Wholesale DSL

BT reported quarterly revenue of GBP 4,822 million, up 5% in the quarter with the continued strong growth of new wave revenue more than offsetting the decline in traditional revenue. Some highlights:

The strong growth in new wave revenue continued and at GBP 1,439 million was 39 per cent higher than last year. New wave revenue accounted for 30 per cent of the group's revenue compared to 22 per cent in the second quarter of last year. New wave revenue is mainly generated from networked IT services, broadband and mobility. Networked IT services revenue grew by 31 per cent to GBP 918 million, broadband revenue increased by 76 per cent to GBP 350 million and mobility revenue increased by 33 per cent to GBP 65 million. Excluding Albacom and Infonet, the organic growth in new wave revenue was 25 per cent.

Networked IT services contract wins were GBP 0.8 billion in the second quarter. Total orders achieved over the last twelve months were GBP 8.2 billion. BT had 6.2 million wholesale broadband connections at September 30, 2005, an increase of 89 per cent compared to last year. During the second quarter BT announced commercial trials of higher speed services of up to 8Mbit/s which are set to begin at the end of November at 25 exchanges initially with a view to product launch in Spring 2006.

Revenue from the group's traditional businesses declined by 5 per cent (4 per cent excluding the impact of reductions to mobile termination rates and Albacom). This was a continuation of recent trends and reflects regulatory intervention, competition, price reductions and also technological changes that we are using to drive customers from traditional services to new wave services.

Consumer revenue in the second quarter was 5 per cent lower. New wave consumer revenue increased by 76 per cent, driven by the continuing growth of broadband. Traditional consumer revenue declined by 11 per cent year on year (10 per cent lower excluding the impact of reductions to mobile termination rates) reflecting the continued impact of Carrier Pre-Selection (CPS), wholesale line rental (WLR) and broadband substitution.

21st Century Network

BT reported progress on its 21st Century Network. The company is working on concluding the contractual agreements with eight preferred suppliers to build a converged core network. BT is auditing sites nationally, and is working to put in place a world class inventory management system to prepare for the installation of equipment from preferred suppliers. This process has already been completed in the Cardiff area, which will see the first live implementation of 21CN in the second half of 2006. The plan for national rollout is being discussed with industry through the communication forum, Consult21, and agreement is expected around the end of the current financial year. Trials for delivery of services over 21CN are continuing using equipment from BT's preferred suppliers.