BT 2001 Annual Report Download - page 33

The lines of business’ results for the 2001 ¢nancial year
areasfollows:
Total
turnover
£m
Total operating profit (loss)
before exceptional items
and goodwill amortisation
£m
BT Retail 11,813 1,004
BT Wholesale 11,493 2,540
BT Wireless 3,947 (225)
BT Ignite 3,861 (380)
Concert 2,576 19
Yell 778 210
BTopenworld 212 (296)
Other 7,151 539
Eliminations (12,165) –
Totals 29,666 3,411
The group’s pro¢ts are derived predominantly from BT Retail
and BT Wholesale’s ¢xed network business in the UK. The
pro¢t from BT Wireless’s mobile network in the UK is largely
o¡set by losses being incurred in establishing its networks in
Ireland, The Netherlands and Germany. Yell contributed a
pro¢t principally from its Yellow Pages directory activities in
the UK. BT Ignite and BTopenworld are both in a development
stage incurring losses.
Turnover
Group turnover, excluding BT’s share of the ventures’ turnover,
grew by 9.1% to »20,427 million in the 2001 ¢nancial year after
growing by 10.4% in the 2000 ¢nancial year compared with the
1999¢nancialyear.Thestronggrowthindemandforthe
group’s products and services of approximately 9% in the 2001
¢nancial year was partially o¡set by the e¡ect of price
reductions which averaged approximately 1% across the
business. The principal areas of growth were through the
acquisition of interests in Europe and from interconnect with
other UK operators. Acquisitions made in the 2001 and 2000
¢nancial years contributed approximately »940 million to the
growth in turnover. The transfer of certain BT businesses to the
Concert global venture in January 2000 has had the e¡ect of
reducing group turnover by approximately »610 million. In the
2000 ¢nancial year, acquisitions in the 2000 and 1999 ¢nancial
years contributed about 25% of the growth in group turnover.
Growth in demand of approximately 11% in the 2000 ¢nancial
year was partially o¡set by the e¡ect of price reductions which
averaged approximately 3% across the business. Both mobile
calls and interconnect receipts in the UK made strong
contributions to the growth in group turnover in the 2000
¢nancial year, as a result of the signi¢cant growth in
BT Cellnet’s mobile customer base and increased mobile usage.
The group’s turnover by product is analysed as follows:
2001
£m
2000(a)
£m
1999(a)
£m
Fixed-network calls 5,655 5,908 6,026
Exchange lines 3,674 3,526 3,351
Receipts from other operators 2,814 1,974 1,417
Wireless products 2,760 2,170 1,400
Private services 1,091 1,135 1,140
Solutions 1,074 915 746
Yellow Pages and other directories 754 642 491
Customer premises
equipment supply 726 847 870
Other sales and services 1,879 1,598 1,512
Group turnover 20,427 18,715 16,953
Share of ventures’ turnover 9,937 3,364 1,270
Trading between group
and principal joint venture (698) (176) –
Total turnover 29,666 21,903 18,223
(a) Figures for the 1999 and 2000 financial years have been restated
to conform with the method of classification used in the 2001
financial year.
BT Retail
BT Retail’s turnover is mainly derived from BT’s UK ¢xed
network customers through the provision of ¢xed-network call
services, exchange lines and private services.
Turnover from ¢xed-network calls declined by 4.3% to
»5,655 million in the 2001 ¢nancial year following a decline of
2.0% in the 2000 ¢nancial year compared with the 1999
¢nancial year. Fixed-network calls comprise all calls by
customers made from ¢xed lines in the UK, including outbound
international calls. In both the 2001 and 2000 ¢nancial years,
call volume growth was more than o¡set by the e¡ect of
signi¢cant price reductions.
Price reductions had an impact on turnover from ¢xed-
network calls for all the years under review. In the 2001
¢nancial year, the principal reductions were in the prices for
most types of geographic calls. In the 2000 ¢nancial year, the
principal reduction was the 25% cut in ¢xed to mobile call
prices from the end of April 1999 as required by the CC. Other
reductions included enhanced discounts and lower Freefone and
Lo-call prices charged to other service providers. The combined
e¡ect of the price changes to ¢xed-network calls totalled
approximately »280 million in the 2001 ¢nancial year, which
was equivalent to a 5% reduction in call prices following falls
of 9% and 3% in the previous two years.
The main volume growth in ¢xed-network calls in the 2001
¢nancial year was derived from a signi¢cant increase in calls to
mobile phones and the increased use of the internet. In the 2000
¢nancial year, similar factors were also behind the increase in
calls over BT’s ¢xed network. The call volume growth of 2% in
BT Annual report and Form 20-F 33