BT 2010 Annual Report Download - page 31

REVIEW OF THE YEAR OUR LINES OF BUSINESS
29BT GROUP PLC ANNUAL REPORT & FORM 20-F
ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW
Products and services
Wholesale Ethernet
We offer IP-based Ethernet services across the widest national
footprint in the UK market, giving customers high-speed data
connectivity at a range of speeds. At 31 March 2010, Wholesale
Ethernet was available from more than 800 nodes throughout the
UK (2009: 600 nodes).
Private and partial private circuits
BT Wholesale is the largest provider of analogue data circuits in the
UK which help our customers extend the reach of their services and
act as infill solutions for their own networks.
Wholesale broadband
We are the UK’s largest wholesale provider of broadband nationally.
We currently enable more than 8m broadband lines in the UK,
including CP customers who have invested in their own broadband
infrastructure and use our services outside their own network
footprint.
We offer a range of broadband services, delivered over copper
and fibre with speeds of up to 8 Mb/s (ADSL), up to 20Mb/s
(ADSL2+) and up to 40Mb/s and up to 100 Mb/s over fibre. At
31 March 2010, our up to 20Mb/s service, based on ADSL2+
technology, was available from exchanges serving 55% of UK
premises (2009: 40%). In January 2010, we introduced Wholesale
Broadband Connect Fibre, a wholesale variant of BT’s fibre-based
broadband service tailored to the needs of CPs.
Content distribution network
We are introducing a content distribution network in 2011 that will
help our CP customers manage the rapidly rising volume of video
content that is being downloaded over fixed and broadband
networks. Our network will make this traffic more cost efficient for
CPs to manage and will enable a range of new business models for
digital content.
Capacity and call-based products
We continue to sell a wide range of capacity and call-based
products and services, including regulated and new, non regulated
ones. As we refresh our core portfolio with next generation
replacements, we will, over time, migrate these services to our IP
network platform, decommissioning parts of our legacy systems.
One of these new products is IP Exchange, BT Wholesale’s global IP
interoperability platform that allows CPs to manage traditional and
IP voice calls, on a single gateway, regardless of whether the calls
are from mobile or fixed networks.
Operating review
During 2010 BT Wholesale stabilised its financial performance, as
demonstrated by the improving EBITDA trend.
This was achieved through a realignment of our business’s
organisational structure to match more closely the changing needs
of our markets, success in winning a range of new MNS contracts,
the introduction of next generation broadband and Ethernet
services, and focused cost and labour resource reduction. Much of
our cost reduction was delivered through improvements in service
quality and a focus on improving the delivery of products and
services ‘right first time’.
We are focused on the continuous improvement of our customer
experience. This year, for example, we have reduced the number of
high level complaints by more than 35% and since 2006 we have
nearly doubled the average time between faults for our data
customers, from a fault every two years to a fault every three and a
half. We have also improved the service delivery of our new next
generation broadband service to a level comparable with our
traditional broadband service.
The majority of BT Wholesale’s largest UK customers by revenue
have signed long-term MNS contracts, typically for between three
and five years. As a result, the proportion of our business
underpinned by long-term contracts has increased from 10% in
2007 to 40% in March 2010. These contracts include a high
proportion of products and services with low levels of bespoke
development. This allows us to defend product and service
revenues, as well as creating new opportunities for growth.
Managed services revenue is growing, and accounted for 22% of
BT Wholesale’s external revenue in 2010, up from 15% the
previous year.
Revenue under long-term contract
(%)
2008 2009 2010
0
5
10
15
20
25
30
35
40
45
50
-16
-14
-12
-10
-8
-6
-4
-2
0
2
Year-on-year EBITDA movement
(%)
Q1 Q2 Q3
2008 2009 2010
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4