Wednesday, May 13, 2009

BT Reports Weakness in Global Services, Cuts Jobs & CAPEX

BT's overall revenue grew 1% in its latest fiscal quarter, however a poor performance by BT Global Services led the company to report a loss and further accounting write-downs. The company also announced plans to eliminate up to 15,000 jobs out of its employment base of 147,000 employees.

"Three out of four of BT's lines of business have performed well in spite of fierce competition and the global economic downturn. However this achievement has been overshadowed by the unacceptable performance of BT Global Services and the resulting charges we have taken. During the year we have changed the leadership of BT Global Services and started to turn the division around.

"With a recovery programme for BT Global Services in place and our heightened focus on costs and customer service, we now want to accelerate our plans for our future networks. We will examine doubling the pace of the roll out of super fast broadband next year within existing capital expenditure plans, bringing fibre based services within the reach of more than a million homes and businesses and securing the jobs of a thousand BT people," stated Ian Livingston, Chief Executive.

Looking ahead, BT expects its revenue to decline by 4% to 5% in 2009/10, reflecting a continuation of the trends seen in the most recent quarter, the impact of lower mobile termination rates, together with the impact of refocusing BT Global Services. The company plans to deliver a net reduction in capital expenditure and operating costs of well over £1bn in 2009/10. Included within this is a reduction in group capital expenditure to around £2.7bn. As a result, we expect group free cash flow, before any pension deficit payments, but after the cash costs of the BT Global Services restructuring charges, to reach over £1bn in 2009/10 and beyond.

Some additional highlights:

  • BT Global Services revenue increased by 6% to £2,366m, due to the impact of foreign exchange movements
    which contributed 11%, acquisitions which contributed 3% offset by the impact of contract review adjustments of £41m. Excluding the impact of these, underlying revenue decreased by 6% to £2,103m.

  • BT Retail revenue declined by 3% to £2,101m driven by a decline of 8% in calls and lines, partially offset by
    growth in revenue from BT Conferencing, BT Vision and mobility.

  • BT's retail market share of the DSL and LLU installed base remained at 34% at 31 March 2009. Net additions were 99,000 in the quarter, taking total customers to 4.8m and retaining BT's status as the UK's most popular broadband supplier.

  • The BT Vision customer base reached 423,000 customers at 31 March 2009. 90% of new customers took a
    subscription package at the point of sale.

  • BT Openzone minutes have increased by 80% against the same quarter last year to 120 million minutes.

  • BT FON membership has also grown with members now totaling 220,000, an increase of 37% against the
    previous quarter.


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