BT 2012 Annual Report Download - page 50

47
Performance
Products and services
Our overall copper line base increased by 136,000 in the year, and
has now grown for six consecutive quarters, as customers recognise
the advantage of fixed-line broadband. At 31March 2012 we were
providing 15.5m WLR lines to other BT lines of business and 6.3m to
other CPs.
-125
-50
-75
-100
-25
0
25
50
75
100
000
Change in copper line base quarter on quarter
2012
Q1 Q1 Q1Q2 Q2 Q2Q3 Q3 Q3
2010
Q4 Q4 Q4
2011
-116
-68
-67
-75
-41
-17
43
26
18
11
34
74
At 31 March 2012 around 93% of UK premises were served by an
unbundled exchange and there were 16.8m unbundled lines in the UK,
up 6.9% on the previous year. Of these, 8.5m were for other BT lines of
business to support broadband services and 8.3m were for other CPs.
More than 30 CPs are providing services using LLU and we are fulfilling
more than 50,000 LLU orders a week.
Demand for our Ethernet services further increased in 2012, with the
number of Ethernet circuits rising by 25%. This growth was driven
both by higher demand for connections to CPs’ business customers,
and by demand from CPs for higher speed connections within their
own networks.
Cost transformation
Net operating costs increased by 1% (2011: 13% decrease) as efficiency
improvements were offset by higher labour costs due to additional
engineering activity and increased leaver costs.
Customer service delivery
We have improved our delivery performance for new copper lines. We
worked with industry to establish a target lead-time of 14 days, and
were performing consistently better than this by the end of the year.
The main disappointment in the year was the higher than expected
level of copper network faults which was largely driven by the higher
adoption and usage of broadband.
Financial performance
Year ended 31 March
2012
£m
2011a
£m
2010a
£m
External revenue 1,623 1,504 1,287
Internal revenue 3,513 3,426 3,877
Revenue 5,136 4,930 5,164
Net operating costs 2,837 2,798 3,204
EBITDA 2,299 2,132 1,960
Depreciation and amortisation 939 877 856
Operating profit 1,360 1,255 1,104
Capital expenditure 1,075 1,087 907
Operating cash flow 1,195 1,078 1,167
a Restated. See page 111.
In 2012 revenue increased by 4% reflecting growth in Ethernet, LLU
and fibre revenue. In 2011 revenue decreased by 5%, or by 1% after
reflecting changes in the internal trading model in 2011.
External revenue increased by 8% (2011: 17% increase) largely due to
growth in LLU and Ethernet revenue. Internal revenue increased by 3%
(2011: 12% decrease, or 7% decrease after reflecting the changes in
the internal trading model in 2011) driven by increased revenue from
our Ethernet and fibre portfolio.
Net operating costs increased by 1% (2011: 13% decrease, or 5%
decrease after reflecting the impact of changes in the trading model in
2011) as detailed above.
EBITDA increased by 8% (2011: 9% increase) as revenue growth more
than offset the higher operating costs. Depreciation and amortisation
increased by 7% (2011: 2% increase) reflecting the investment in our
fibre roll-out and Ethernet over the last year. Operating profit increased
by 8% (2011: 14% increase).
The accelerated investment in our fibre roll-out programme was offset
by lower spend on DSL and improved efficiency in asset utilisation and
phasing, resulting in capital expenditure reducing by 1% (2011: 20%
increase).
Operating cash flow increased by 11% (2011: 8% decrease) primarily
due to the higher EBITDA and lower capital expenditure.
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