BT 1998 Annual Report Download - page 2

Download and view the complete annual report

Please find page 2 of the 1998 BT annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 87

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87

Chairman’s statement
The 1998 financial year proved to be a very
important chapter in the BT story, even if not
quite in the way we anticipated 12 months ago.
This time last year, we expected that there was a
good chance that our prospective merger with MCI
Communications Corporation would be completed
by the end of the calendar year. In the event, of
course, this did not happen. WorldCom tabled a
considerably higher bid for MCI and we did not
feel that it would be in shareholders’ best interests
to match it.
In our view, the preferable course was to
accept the offer WorldCom made for our 20 per
cent holding in MCI. On completion of the
MCI/WorldCom merger, BT will receive around
US$7 billion (more than £4 billion). This, added
to the break-up fee and expenses, represents over
US$54 per share for a holding we acquired for
just over US$32 per share in 1994. As I write, the
MCI/WorldCom merger is awaiting regulator y
clearance in the USA and Europe.
Nor has the success of Concert Communications
Services, our joint venture with MCI, been
compromised. Indeed, Concert has continued
to lead the world in providing global managed
network services to multinational customers.
MCI WorldCom will, for a period, have
non-exclusive rights to distribute Concert
products in the USA. Beyond that, we shall
ensure that enduring distribution arrangements
are put in place for the longer term.
In other important respects, this has been a good
year for your company – both in the UK and in
other markets around the world.
Turnover has grown by 4.7 per cent and we
have seen strong growth in demand. Customers
have benefited from sound quality of service,
price cuts worth over £750 million in the year,
and a range of new and exciting services. Our
Internet-related business is growing fast and we
are seeing considerable demand for second lines
and ISDN connections. We have also announced
amajor upgrade to our broadband network to
match the ever-increasing volumes of data we
are required to carry.
Earnings per share were 26.7 pence and I am
pleased to report a final dividend for the year of
11.45 pence per share, which brings the total
dividend for the year to 19 pence per share,
which is as forecast. This represents an increase
of 6.4 per cent on last year, adjusted to take
account of the special dividend that we paid in
September 1997.
Relations with the new Government have been
good. Notwithstanding the so-called “Windfall
Tax”, which we did not and do not believe was
appropriate to BT, the Government’s interest in
the social and economic benefits that information
technology can bring is clear and undiminished.
We are proud to support the Government’s New
Deal welfare-to-work initiative, and have been a
key player in developing the “national grid for
learning” in the UK.
Outside the UK, liberalisation has been gathering
momentum. The World Trade Organisation is
committed to opening telecommunications
markets; and, in Europe, give or take the odd
derogation, there has been full competition in
the market since 1 January 1998. BT has now
established a presence throughout the European
Union, and we are engaged in turning long-awaited
opportunities into action, across the world.