BT 2007 Annual Report Download - page 11

Broadband at the heart of BT
In the 2007 financial year, we continued our drive to enhance
the awareness, availability and attractiveness of broadband. At
31 March 2007, we had 10.7 million broadband lines including
LLU (local loop unbundling). In the highly competitive retail
market, our market share of consumer and business DSL (digital
subscriber line) and LLU broadband connections in the UK was
34%. With 3.7 million broadband connections including PlusNet,
we are now the UK’s most popular broadband retailer (including
cable).
Create convergent mobility solutions
In a convergent world, individuals and businesses increasingly
need to connect and communicate wherever they happen to be,
using whatever device they choose, and we offer a range of
mobility services in both the consumer and business markets.
In the 2007 financial year, group mobility revenues were
£294 million. The emphasis was increasingly on new services
that give customers the best of fixed and the best of mobile
communications, either combined in a single handset or bundled
together in a compelling offer. At 31 March 2007, we had a
total of 314,000 mobile connections in the UK (both GSM and
our new, intelligent fixed/mobile service, BT Fusion). In addition,
we manage around 100,000 connections on behalf of large
enterprise customers, the majority of which are outside the UK.
The number of customer minutes on BT Openzone (our public
wireless broadband service) grew by 60% in the 2007 financial
year compared with the previous year.
Defend our traditional business
Although we continue to face challenges in our traditional
markets as a result of competition, a shift in our customers’
buying patterns and a tough regulatory regime, we aim to
defend our traditional business – mainly calls and lines – while
offering customers new, next-generation services.
0
-1
-2
-3
-4
-5
-6
Traditional revenue trend* (%) per quarter
*Revenue versus same period in prior year adjusted for the impact of mobile termination rate reductions and
excluding Albacom 2005/06
Active voice customer losses/additions (000)
50
0
-100
-200
-300
Active voice customer (customers who generate voice revenue)
losses in the 2007 financial year were the lowest for more than
three years in spite of intense competition from other providers
packaging calls with broadband. This reduced rate of loss was
driven by a range of price reductions and by encouraging
customers to sign up for our innovative pricing packages.
Transform our networks, systems and services
for the twenty-first century
Our strategy is to build innovative and versatile networks that
will be a platform for rapid delivery of new services and
simultaneously transform the customer experience and enable us
to operate ever more cost effectively. Our 21CN (twenty-first
century network), for example, is helping to define
communications networks for the future and we are investing in
an innovative flexible systems infrastructure throughout BT.
Our UK network
BT has the most comprehensive fixed-line communications
network in the UK, with around 5,600 exchanges, more than
700 local and 100 trunk processor units, more than 120 million
kilometres of copper wire and more than nine million kilometres
of optical fibre, and the most extensive IP backbone network in
the UK. The network services we provide include frame relay,
ATM (asynchronous transfer mode) and IPVPN (internet protocol
virtual private network).
Our global reach
We have one of the broadest IP-enabled networks in Europe
and our network-based services extend to and across North and
South America and the Asia Pacific region.
At 31 March 2007, our flagship MPLS (multi-protocol label
switching) network service provided coverage and support to
over 100 countries from more than 1,300 points of presence.
Our MPLS revenue grew by 31% during the 2007 financial year
to £556 million.
Global customer service is provided via service and network
management centres around the world, 24 hours a day, seven
days a week.
Create long-term partnerships with our customers
We believe that our relationships with our customers are key
particularly in a market experiencing major transformation.
Understanding customers’ needs and responding to them
flexibly, comprehensively and with insight is critical in helping to
differentiate us from our competitors. That is why we aim to put
the customer at the heart of everything we do – strengthening
that relationship and building trust and delivering what we
promise. This is encouraging customers to move from short-term
contracts based on individual transactions, to longer-term
arrangements under which they sign up for packages of services.
OUTLOOK
Our performance underpins our confidence that we can continue
to grow revenue, EBITDA before specific items, earnings per
share before specific items, and dividends over the coming year.
We are confident in our ability to improve shareholder returns
and accelerate the strategic transformation of the business. In
addition, taking into account the group’s net debt level and
strong cash flow generation, we have decided to introduce a
new £2.5 billion share buy back programme, while increasing
dividends and investing in the growth of the business. We
expect this buy back programme to be completed by 31 March
2009. We seek to maintain a solid investment grade credit
rating and will continue to invest for the future and, with an
efficient balance sheet, further enhance shareholder value.
Report of the Directors Business review
10 BT Group plc Annual Report & Form 20-F