BT 2009 Annual Report Download - page 10

ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS BUSINESS AND FINANCIAL REVIEWS OVERVIEW
BUSINESS AND FINANCIAL REVIEWS
8BT GROUP PLC ANNUAL REPORT & FORM 20-F
Introduction
BT is a communications services company which operates in more
than 170 countries worldwide. We are proud to serve customers
that range from some of the largest multinational corporations and
public sector organisations in the world, through the small business
sector to millions of families and residential customers in the UK.
We are at the heart of a communications revolution which is
continuing to improve the quality of people’s lives and the
effectiveness of their businesses. It is our job to bring together the
best technology to create services that our customers need while
offering them the very best value.
Our 2009 performance
In 2009, in spite of the economic downturn, three of our lines of
business – BT Retail, BT Wholesale and Openreach – have each
performed well. Both BT Retail and Openreach delivered EBITDA
growth while in BT Wholesale the rate of decline in revenue has
slowed. This good performance was primarily due to the effective
delivery of cost savings. However, these achievements were
overshadowed by the unacceptable performance in BT Global
Services.
The issues in BT Global Services
During the 2009 financial year, the level of profitability in BT Global
Services fell significantly. This was caused by a combination of
higher costs, the slow delivery of cost reduction initiatives and
worsening economic conditions. This led the Board to conclude
that previous estimates of profitability for some of our major
contracts were no longer likely to be achieved.
On page 10 we explain what actions the Board took as a result of
these issues and how BT Global Services is being restructured to
streamline and refocus the business.
Our focus
We aim to make BT a better business and drive shareholder value by
delivering on our current strategic priorities better, faster and cheaper.
These are:
providing excellent customer service
building future networks
becoming more agile.
Providing excellent customer service
Our goal is to provide excellent service in every market in which we
operate by putting our customers at the heart of everything we do.
Every part of BT is taking action to make substantial
improvements to the delivery of our services. That means getting
things right first time every time, keeping our promises to our
customers and meeting or exceeding their expectations.
We continually track improvements that reflect the real experience
of our customers from start to finish. We have made significant
progress in the last 12 months across the whole range of our
customers and we are determined to make further improvements.
In the highly competitive markets in which we operate we believe
that being recognised for outstanding customer service is a key
differentiator for BT.
As an example of the progress we are making in the consumer
market, the time taken to get through to an adviser fell by 65% in
the past year. Our customers experienced a reduction of more than
20% in the number of line faults, which means that a line will go
wrong on average just once every 13 years. In the small business
market, there was a 20% improvement in the average time to clear
telephony network faults, while the average time to provide
international multi-protocol label switching (MPLS) services to
large business customers reduced by over 40%.
Building future networks
The digital revolution is opening up a world of new possibilities for
all our customers. It means people can work together and
collaborate more effectively than ever before. They can be
entertained and informed in ways that would have been hard to
imagine just a few years ago. We think this revolution has only just
begun, and we are investing in our networks, systems and services
to ensure that they are fit for the future.
In July 2008, we announced plans to make Britain’s biggest ever
investment in a fibre-based super-fast broadband network. We will
spend £1.5bn making fibre based services available to around 40%
of the UK’s homes and businesses by 2012. This will deliver a range
of services with top speeds of up to 100Mb, allowing customers
simultaneously to run multiple bandwidth-hungry applications,
such as high-definition movies, gaming, complex graphics and
videos; all with greatly improved upload as well as download speeds.
These plans are conditional on our ability to make a proper return
on our investment, and we have seen encouraging progress in
establishing the right regulatory basis for this investment.
Super-fast broadband will run on BT’s 21CN infrastructure. 21CN
is our next generation global platform and has been at the heart of
BT’s transformation for some years.
We have now completed the new 21CN core network which is a
unified software driven platform. It will help us meet our
customers’ needs faster and more efficiently whether they are
delivered over copper or fibre. It will reduce the time it takes to get
new services to market, eliminating duplication and reducing costs.
Our flagship MPLS network service provides coverage and
support around the world from 875 BT managed points of presence
and around 2,600 in partnership.
Falling prices, rising data speeds and constant innovation continue to make the
communications marketplace dynamic and intensely competitive. In 2009, we faced the
additional challenges of the economic downturn and an unacceptable performance from
BT Global Services.
BUSINESS REVIEW
BUSINESS AND FINANCIAL REVIEWS