BT 2009 Annual Report Download - page 5

ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS BUSINESS AND FINANCIAL REVIEWS OVERVIEW
OVERVIEW
3BT GROUP PLC ANNUAL REPORT & FORM 20-F
OVERVIEW
CHAIRMAN’S MESSAGE
A sustainable business
BT has a proud record of contributing to the communities in which we
work and of building a sustainable business. We believe our services
are an important part of the solution to climate change.
Thousands of our people are involved in voluntary work and I am
keen to build on this heritage and make sure that as a global
business BT’s Better World Campaign takes a genuinely global view.
Your Board
In December 2008, we welcomed Tony Chanmugam to the Board
as Group Finance Director in succession to Hanif Lalani who had
become Chief Executive, BT Global Services.
Since joining BT I have been extremely fortunate to have as my
Deputy Chairman, Maarten van den Bergh who is stepping down
from the Board at the conclusion of this year’s AGM in July.
Maarten has been a tremendous asset to the Board having served
as senior independent director since 2006 and as Chairman of both
the Board’s Pension Scheme Performance Review Group and
Remuneration Committee. I would like to thank him for almost nine
years of distinguished service.
I would also like to express my gratitude to Matti Alahuhta who
has decided to step down at the end of May having served as a non
executive director for just over three years. His telecommunications
industry and international experience have been of great value to
the Board and we wish him well.
I am working with the Nominating Committee to strengthen your
Board following these departures and we will announce new
appointments shortly.
My thanks also go to the rest of the Board for their extremely
hard work during the last challenging months. I would also like to
pay tribute to the BT staff. Everywhere I go I have been struck by
their passion and commitment. I am confident in their ability to
build on BT’s many strengths in the future.
The future
BT is in business for the long-term. We invest billions of pounds into
the UK’s IT infrastructure for the long-term. We are seeking the
regulatory certainty which will support long-term business
decisions. And we want long-term relationships with our customers
that are based on excellent service, and on our enduring
commitment to helping them thrive in this fast changing world.
The world looks a very different place than it did a year ago. Global
trade has contracted for the first time in many decades. Financial
markets have been in turmoil and trading conditions worldwide remain
extremely challenging. Against this background, the importance of
defending free trade and fighting for regulation that promotes
investment and encourages competition has never been greater.
Our management team not only understands the challenges, but
also sees the opportunities that lie ahead. Three out of our four
principal divisions (BT Retail, BT Wholesale and Openreach) are
delivering well. Management’s highest attention is now directed
towards returning BT Global Services, our one under performing
division, to profitable growth.
We have agreed with the Trustee of the BT Pension Scheme the
pension contributions for the next three years, enabling the Board
to announce a sustainable dividend policy.
The proposed final dividend of 1.1p gives a full year dividend of
6.5p which rebases dividend payments to a level which we are
confident is sustainable. The Board is committed to delivering
attractive returns for shareholders and believes that the operational
improvements in the business will generate sufficient cash flow to
allow the dividend to grow at the same time as investing in the
business, reducing debt and supporting the pension scheme.
Regulation
It is clear how important the 2005 Telecommunications Strategic
Review by Ofcom has been in establishing the UK as the most
competitive telecommunications market in the world. While the
price of other utilities has soared, the price of communications has
fallen sharply. New market entrants have flourished, encouraged by
low wholesale prices and incentives to invest in unbundled local
loops. Britain has more companies competing in the same space
than any comparator country.
Now a healthy debate is underway about the investment needed
to deliver the next generation of broadband services. These will be
carried largely over fibre optic cables able to deliver speeds of up to
100Mb compared with a typical speed of 4-5Mb today. This
investment will provide the UK with the world class IT infrastructure
it will need to thrive as a knowledge-based society.
It is essential that the regulatory environment encourages
investment. This means that BT and others must have the potential to
make a return for shareholders that is commensurate with the risk
involved. We need a level playing field in the UK’s fast moving market
which allows every company to compete on equal terms and makes
sure that new monopolies are not allowed to emerge. We also need
regulation to move at the same speed as the market is evolving.
In our overseas markets, particularly in the rest of Europe and in
North America, regulators must do more to encourage fair
competition. BT should be able to invest and compete in any other
country, in the same unrestricted manner that overseas companies
can invest and compete in the UK. Sir Michael Rake
Chairman
13 May 2009
Sir Michael Rake
Chairman