BT reported revenue of £5,303 million for its second fiscal quarter ended September 30, 2008, up by 4% over the previous year based on continued growth in managed solutions and broadband and convergence revenue. However, the company experienced weakness in BT Global Services primarily due to slower than anticipated delivery of efficiency savings, the continued decline in higher margin UK business and the negative effects of currency movements. Overall, EBITDA came in at £1,429 million, down 1%.
“Three out of our four business units, BT Retail, BT Wholesale and Openreach are delivering on or ahead of target. But profits in BT Global Services are simply not good enough and we are taking decisive action to put matters right. We have appointed Hanif Lalani as the new CEO of BT Global Services and he will continue to grow the business while reducing the cost base,” said Ian Livingston, BT’s CEO.
Some key points of the quarterly report.:
- BT plans to cut its work force by about 10,000 positions. The work force currently includes 110,000 direct employees and 50,000 indirect employees (contractors, off-shore workers, etc).
- Managed solutions revenue, including MPLS and networked IT services, increased by 23 per cent to £1,523 million, and broadband and convergence revenue increased by 2 per cent to £649 million. This was partially offset by an 8 per cent decline in revenue from calls and lines to £1,601 million, together with a 4 per cent decline in revenue from transit, conveyance, interconnect circuits, WLR, global carrier and other wholesale products to £822 million.
- BT had 13.3 million wholesale broadband connections (DSL and LLU) at September 30, 2008, including 5.1 million local loop unbundled lines. There were 258,000 net additional broadband connections in the quarter. BT’s retail share of those net additions was 27 percent. In the maturing broadband market, BT remains the UK’s number one retail broadband provider with a customer base of 4.6 million. BT’s retail market share of the DSL and LLU installed base was 34 percent at September 30, 2008.
- BT’s next generation Ethernet platform now has 110 nodes complete and the company is on target for 600 by April 2009.
- ADSL2 service at up to 24 Mbps should be available to 40% of UK by April 2009. The company is taking orders from 8 resellers.
- BT’s MPLS network now has 1,282 PoPs in over 170 countries. The company is installing 5,200 new MPLS connections per month – up 68%.
- As an example of its cost-saving strategy, BT cited its 7 year contract with Alcatel-Lucent to manage non-UK
legacy networks. This deal is expected to yield savings of c.£100m over the contract term.
http://www.btplc.com