BT 2013 Annual Report Download - page 62

Performance
60
Openreach
We have now increased fibre broadband coverage
to more than 15m premises and achieved 873,000
net connections in the year. Our physical line base
grew by 54,000. But our service performance was
not good enough, affected by the poor weather
conditions.
Key facts
Fibre broadband
coverage now more than
15mpremises
Continued growth in
copper lines
873,000 new fibre
broadband customers
Ethernet circuits up 15%
Operating performance
We brought fibre broadband to a further 6.2m homes and businesses in
the year, equivalent to around 120,000 per week.
Take-up is growing strongly, with more than 1.5m homes and businesses
now connected.
We won 19 Broadband Delivery UK (BDUK) bids to deploy fibre
broadband in areas outside our commercial fibre broadband footprint.
In December 2012 we connected the first BDUK customers in North
Yorkshire, less than six months after signing the contract.
There are 17.6m broadband users on our network, an increase of
834,000 in the year.
Demand for our Ethernet services continues to grow – the number of
Ethernet circuits rose by 15%. This growth reflects higher demand for
connections for CPs’ business customers as well as CPs requiring greater
speeds and capacity within their own networks.
Lastly, despite the problems caused by the poor weather, we still
managed to grow our physical line base by 54,000 in the year.
Customer service delivery
Our service delivery was strong in the first quarter but deteriorated for
the next two quarters following some of the wettest weather on record.
This meant we had to spend more time than expected on repair work.
There were more faults to fix and it took longer to put them right. This
additional work stopped us from delivering new services as quickly as
wehad planned.
To meet higher levels of demand and improve customer service, we
recruited around 1,600 new engineers. We also made abig investment
in the tools used by our engineers, making them moreproductive.
Thanks to these changes, we were able to carry out 8% more engineer
visits in the second half of the year than in the second half of 2011/12.
This meant that by February 2013, our provision lead times were back
atthe levels we have committed to.
Cost transformation
Net operating costs decreased by 3% (2011/12: 1% increase) despite
the additional engineering resource we took on which increased our
labour costs.
We achieved this reduction through efficiency improvements, for
example in our back-office functions and call centres. We also improved
the productivity of our field engineers by reducing the number of
administrative tasks they have to do and by making better use of
theirtime.
Investing for the future
On top of investing in our fibre broadband rollout we spent around
£190m on our copper network to improve performance and enhance
resilience.
We upgraded the IT systems that support our interactions with
customers and our internal processes. We also added more hoists to
ourfleet to support heavy-duty engineering work.
Financial performance
Year ended 31 March
2013
£m
2012
£m
2011
£m
External revenue 1,747 1,623 1,504
Internal revenue 3,320 3,513 3,426
Revenue 5,067 5,136 4,930
Net operating costsa2,753 2,837 2,798
EBITDA 2,314 2,299 2,132
Depreciation and amortisation 972 939 877
Operating profit 1,342 1,360 1,255
Capital expenditure 1,144 1,075 1,087
Operating cash flow 1,147 1,195 1,078
a Net of other operating income.
External revenue increased by 8% (2011/12: 8%), while internal
revenue decreased by 5% (2011/12: 3% increase), bringing total
revenue down by 1% (2011/12: 4% increase).
The revenue decline was due to regulation-driven price changes,
impacting revenue and EBITDA by around £180m, representing 4%
of total revenue and 8% of total EBITDA. This was partially offset by
revenue growth from Ethernet, LLU and fibre broadband.
EBITDA increased by 1% (2011/12: 8%), with the decline in revenue
offset by a 3% reduction in net operating costs (2011/12: 1% increase).
Depreciation and amortisation increased by 4% (2011/12: 7%)
reflecting the accelerated investment in fibre broadband, which also
led to capital expenditure increasing by 6% (2011/12: 1% decrease).
Operating profit decreased by 1% (2011/12: 8% increase).
Operating cash flow decreased by 4% (2011/12: 11% increase)
primarily due to the higher capital expenditure and timing of
debtorreceipts.