BT 2001 Annual Report Download - page 17

BT Annual report and Form 20-F 17
tra⁄c and international products for
business customers.
Supporting Concert, BT, AT&T and
their respective families of joint ventures
is a common networking architecture
planned to provide seamless service to
customers. Concert’s frame relay network
reaches every major city in the UK and
USA and extends to over 200 cities in
60 countries. Its global public network
reaches 237 countries directly. Concert
also has investments in 115 undersea
cables totalling more than 480,000
kilometres globally.
In addition to using BT and
AT&T’sextensivenetworksintheUK
and USA, Concert has built a high-speed
IP backbone network, spanning 21 cities
in 17 countries. This supports a wide
range of internet access, internet
backbone and IP virtual private network
services. Concert’s IP network is
interconnected with BT and AT&T’s
domestic IP backbone networks, which
distribute Concert services in the UK and
USA.
Work is underway to converge
Concert’s network, infrastructure and
managed services with those of AT&T
Global Network Services, previously IBM
Global Network. When this is complete,
the Concert IP backbone network should
extend to more than 60 cities worldwide
and the combined portfolio of IP, data
and virtual private network services will
be o¡ered through Concert, AT&T and
BT Ignite distribution channels,
particularly for delivery in Europe, Asia
Paci¢c and Latin America. See
‘‘Discussions with AT&T regarding
Concert and BT Ignite’’, below.
Discussions with AT&T regarding Concert
and BT Ignite
We and AT&T are discussing ways to
improve the performance of the business
and strengthen the scope of the
relationship between us and AT&T in
business services. These discussions
include a variety of strategic alternatives
to the Concert joint venture, including
the sale to, or other business combination
of our business services operations with,
AT&T’s business services unit upon its
planned separation from the remainder of
AT&T.Suchatransactioncouldinclude
all or a substantial portion of our
business services operations, including
BT Ignite and our interest in Concert, in
exchange for some mixture of cash,
equity and/or other instruments in the
combined business. These discussions
mayormaynotleadtoanysaleorother
business combination and may or may
not lead to any change in the existing
alliance arrangements. As possible
alternatives to such a transaction, we
have also been considering a narrowing
ofConcert’sbusinessscope,aswellasits
termination as a joint venture. There can
be no assurances, however, that
agreement could be reached with AT&T
with regard to either of such alternatives.
The BT Board believes that the
BT Ignite and Concert businesses will
generate potentially signi¢cant value for
the group in the future. The Board will
keep under review whether this value is
best achieved for shareholders by a
combination of these businesses with
AT&T’s business services unit, a
disposal of all or part of the businesses
or their separation from BT by way of
IPO or demerger from BT. Where
necessary, we will seek the approval of
our shareholders.
Other
We hold a 26% stake in Cegetel, a
leading French telecommunications
company providing a broad range of
telecommunications services, including
mobile and ¢xed telephony, internet
access, data services and transmission.
We currently intend to retain our
shareholding in Cegetel. We also have
¢xed and wireless operations in Canada,
Hong Kong, India, Italy, Singapore and
South Korea.
Future BT will also include a
number of other business units, including
Information Systems Engineering, £eet
operations, logistics and procurement
services and BTexact Technologies,
a world-renowned research and
development capability.
Research and development
Our commitment to research and
development is fundamental to ensuring
that we can continue to provide our
customers with advanced information
and communication services.
In the 2001 ¢nancial year, we
invested »364 million in research and
development, compared with »345
million and »268 million in the 2000 and
1999 ¢nancial years, respectively.
Major areas of work included next-
generation internet, broadband wireless
and ¢xed access networks; advanced data
services; information and network
security; 3G mobile multimedia services;
and software systems to support the
management and integrity of our
networks worldwide. We are also
undertaking research on the impact of
advanced communications on lifestyles,
education and healthcare in the
connected society of the twenty-¢rst
century.
On 1 April 2001, we launched
BTexact Technologies, a wholly-owned
business comprising our engineering and
technology research and development
activities. BTexact Technologies’
principal customers are the BT lines of
business and our alliance partners.
However, we also intend to o¡er a select
portfolio of professional and consultancy
services to external customers. BTexact
Technologies plans to exploit BT’s
extensive intellectual property rights
where this is to our commercial and
strategic advantage.