BT 1998 Annual Report Download - page 6

BT is one of the world’s leading suppliers of fixed
and mobile communications services. In the UK,
w e s u p p o rt around 27 million customer lines and,
t h rough our 60 per cent stake in Cellnet, over thre e
million mobile connections. Our main services are
local, national and international calls (with dire c t
dialling to over 230 countries worldwide); and
supplying telephone lines, equipment and private
c i rcuits for homes and businesses.
Outside the UK, our strategy is to expand in chosen
markets by developing a series of alliances and joint
venture partnerships, and we have put in place one of
the most comprehensive global networks of any operator.
In Concert Communications Services, we have the
world’s leading supplier of global network solutions
to multinational customers.
We are also at the forefront of the development and
marketing of a comprehensive range of advanced data
and interactive multimedia solutions and technologies
of the future.
As businesses increasingly operate internationally, and as
more and more people are travelling and working abroad,
so the demand for international communications grows.
In the past ten years, international communications –
phone, fax, video, data – have more than doubled from
33 billion minutes a year to 68 billion minutes.
This growth in demand has been complemented by
the liberalisation of telecommunications markets around
the world. At the beginning of the 1990s, only about
20 per cent of the world’s total telecommunications
market was open to competition; by the end of the
decade, only about ten per cent will not be.
We currently have three target geographies – North
America, Europe and Asia-Pacific – and our strategy is to
work with local partners. We now have a number of key
partnerships around the world and significant investment
in international services.
The USA
In the USA, the principal news in the year was the
announcement by MCI Communications Corporation on
10 November 1997 that it was recommending a merger
with WorldCom to form MCI WorldCom and that
WorldCom would be buying BT’s stake in MCI.
The WorldCom bid for MCI was considerably higher than
that made by BT and the BT Board did not feel it would
be in shareholders’ interests to raise its offer.
WorldCom has agreed to pay BT around US$7 billion
(more than £4 billion) for our share in MCI. This,
added to the US$465 million break-up fee and partial
reimbursement of expenses, represents over US$54 per
share for a holding that was acquired for US$32 per
share in 1994. At the date of this report, the proposed
MCI/WorldCom merger was awaiting the necessar y
regulatory clearances.
BT is now assessing the options open to the group. We
remain committed to securing appropriate distribution
channels for the delivery of services to our US customers.
Concert
Through the highly successful Concert Communications
Services, BT will continue to deliver global networking
solutions to our multinational customers, more than
40 per cent of whom are headquartered in the USA.
Concert already has 3,800 major corporate customers
in more than 50 countries.
Around 40 per cent of the Fortune Global 500 companies
use Concert services, and around 60 per cent of Concert’s
customers subscribe to more than one service.
Concert has committed future revenues of almost
US$1 billion per annum and has been rated the
best-positioned global networking outsourcer and top
global provider of international voice services in a survey
by the Yankee Group, a leading telecommunications
consulting firm.
MCI WorldCom will continue to distribute Concer t
services in the USA, on a non-exclusive basis, for a
limited period of time.
Europe
In mainland Europe, it is a time of great opportunity
for BT. By 1 January 1998, the major European Union
countries had to open their telecoms markets to full
competition. Some of Europe’s business and mobile
markets have been open for some time but now, with
just a few exceptions, there is open competition for the
business of 300 million residential customers across the
continent, in a market that will be worth an estimated
£140 billion a year by 2001.
Business review