BT 2009 Annual Report Download - page 30

ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS BUSINESS AND FINANCIAL REVIEWS OVERVIEW
BUSINESS AND FINANCIAL REVIEWS OTHER MATTERS
28 BT GROUP PLC ANNUAL REPORT & FORM 20-F
Competition law
In addition to communications industry-specific regulation, BT is
subject to the Competition Act 1998 (Competition Act) in the UK
and to EU competition law. Where we operate outside the UK, we
are also subject to the competition laws in the relevant countries.
In 2004, Ofcom launched an investigation into allegations that
BT had abused a dominant position in relation to its pricing of
consumer broadband products. Ofcom sent BT three statements of
objection to which we responded and argued that our pricing does
not amount to an abuse of dominance. Ofcom is expected to issue a
decision in due course.
Branches outside the UK
BT operates branches outside the UK in Europe, the Middle East,
Africa, the Americas and the Asia Pacific region.
Our relationship with HM Government
The UK Government, collectively, is our largest customer, but the
provision of services to any one of its departments or agencies does
not comprise a material proportion of our revenue. Except as
described below, the commercial relationship between BT as a
supplier and the UK Government as a customer has been on a
normal customer and supplier basis.
We can, however, be required by law to do certain things and
provide certain services for the UK Government. General conditions
made under the Communications Act require all providers of public
telephone networks and/or publicly available telephone services,
including BT, at the request of and in consultation with the
authorities, to make, and if necessary implement, plans for the
provision or restoration of services in connection with disasters. The
Civil Contingencies Act 2004 contains provisions enabling the UK
Government to impose obligations on providers of public electronic
communications networks, including BT, at times of emergency and
in connection with civil contingency planning. In addition, the
Secretary of State has statutory powers to require us to take certain
actions in the interest of national security and international relations.
Legal proceedings
We do not believe that there are any pending legal proceedings
that would have a material adverse effect on the financial position or
operations of the group. There have been criminal proceedings in Italy
against 21 defendants, including a former BT employee, in connection
with the Italian UMTS (universal mobile telecommunication system)
auction in 2000. Blu, in which we held a minority interest,
participated in that auction process. On 20 July 2005, the former BT
employee was found not culpable of the fraud charge brought by the
Rome Public Prosecutor. All the other defendants were also acquitted.
The Public Prosecutor has appealed the court’s decision. If the appeal
is successful, BT could be held liable, with others, for any damages.
The company has concluded that it would not be appropriate to make
a provision in respect of any such claim.
Acquisitions and disposals
We actively review our portfolio of assets and acquisition
opportunities in our target markets. We will consider acquiring
companies if they bring us skills, technology, geographic reach or
time to market advantage for new products and services.
2009
During the 2009 financial year, we completed a number of
acquisitions:
Date Acquisition
May 2008 Wire One Holdings Inc – one of the leading
providers of videoconferencing solutions in the US.
Wire One is central to BT Conferencing’s video
business unit, extending its customer footprint and
enhancing its videoconferencing capabilities.
July 2008 Ufindus Ltd, one of the UK’s leading online business
directories. The acquisition from Iomart Group plc
underpins the continued growth of BT Directories,
our classified advertising and directories business.
July 2008 Ribbit Corporation, a Silicon Valley-based ‘Telco 2.0’
platform company for $105m. The acquisition will
accelerate our transformation into a next generation,
platform-based, software-driven services company.
In addition, it complements our existing capability in
software development platforms. The integration of
Ribbit with 21CN progressed well during the year.
July 2008 Stemmer GmbH and SND GmbH, two German
companies constituting the enterprise IT services
segment of net AG, listed on the Frankfurt Stock
Exchange. The acquisitions strengthen our skills and
capabilities in the German market, in line with our
strategy to offer networked IT services to our
corporate customers in Germany and globally.
We also completed a number of other transactions in 2009,
including:
an agreement with Sekunjalo Investments Ltd, under which
Sekunjalo has become a 30% shareholder in BT’s South African
business
an extension of the geographic scope of our joint venture with
Enìa SpA in Parma, Italy and an increase of our stake in the joint
venture from 55% to 59.5%
the acquisition of the remaining shares of Net2S SA, a publicly
traded IT services company listed in France, other than certain
treasury shares and locked-up shares issued under employee
share plans (we had acquired over 91% of the outstanding issued
share capital of Net2S SA in 2008).
BUSINESS AND FINANCIAL REVIEWS