BT 2014 Annual Report Download - page 46

43
The Strategic Report
Delivering our strategy
Delivering our strategy
BT Wholesale 12-month rolling order intake
Year ended 31 March
0
500
1,000
1,500
2,000
2,500
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
£m
2013 2014
The number and mix of deals signed has changed from last year, with
a greater contribution from smaller contracts. We have invested in
selling and marketing more to our smaller customers, some of whom are
achieving strong growth. For example, this year we agreed a contract
with Timico Technology Group to manage their broadband, Ethernet
and voice estate and migrate their voice trac to IP. We also became
the preferred supplier of Ethernet services to Spitre Technology Group.
Other business won this year includes
• contracts with two UK mobile operators to migrate their voice trac
to IP
• managed data solutions (incorporating leased lines and Ethernet) for
two major US telecoms providers
• data centre services for a mobile operator and
• the provision of outdoor wi- network coverage for Brighton, Cardi
and Glasgow city centres. We have also been appointed as the
preferred supplier for three other cities.
Competition in the market is intense and is putting pressure on prices.
This means that some of the contracts we extended and re-signed in
the year will have lower margins. One of our large customers, The Post
Oce, continued its migration from our white-labelled broadband and
voice services, following its decision in 2012 not to renew its contract
with us.
IP has continued to grow strongly. This year it carried over 11bn voice
minutes within the UK, and over 14bn in total worldwide. Total IP
revenues more than doubled. While in the UK these minutes have largely
replaced calls previously carried over our non-IP network, we expect the
service to boost our long-term position in the market place.
Ethernet performed well too, with the number of circuits sold increasing
50%. Revenues increased 32%, reecting a highly competitive market
for this product.
Customer service delivery
Customer satisfaction levels rose substantially  from 68% at the start
of the year to 78% at the end. Customers responded well to having
clearer service improvement plans backed by a new team of service
improvement managers.
They also appreciated innovations such as a new diagnostic tool that makes
it easier to locate faults, halving the average time it takes them to do so.
Performance levels in our Ethernet and IP products were also better.
Customer satisfaction (3-month rolling average)
Year ended 31 March 2014
65
70
75
80
Q1 Q2 Q3 Q4
%
Source: BT Customer Satisfaction survey. Based on responses from a monthly
random sample of BT Wholesale customers.
The delivery times and reliability of our next generation broadband
services have continued to improve. In the fourth quarter we
• cut the average time to provide WBC over copper by 8% and by 17%
over bre (compared with a year ago) by investing in more automation
• reduced WBC fault rates by 11% on copper and 21% on bre through
better diagnostic tools and
• resolved 73% of queries in one contact with the customer compared
with 62% a year earlier.
These improvements were all reected in our RFT performance which
was up 3.3% for the year.
Cost transformation
Operating costs reduced 9% (201213 13%) or by 3% excluding
transit costs (201213 1%). We achieved this through a structured
programme including
• reducing third-party supplier costs through contract renegotiation
and making sure we only buy and pay for what we need
• achieving eciencies in selling and general administration costs.
These were 13% lower than last year, mainly because of a lower
number of employees and a £5m lower bad debt expense and
• making more ecient use of our network, by more closely matching
the capacity we put in place to the expected demand.
These cost reductions have been partially oset by higher cost of sales
due to changes in our product mix (for example, as traditional voice
services migrate to lower-margin IP).
Over 80% of our people are actively engaged in BTs drive to reduce
energy consumption. This year we continued to remove redundant
exchange equipment from our legacy broadband network. This project
is expected to reduce annualised energy costs by around £10m. Next
yearwe will begin to benet from similar work in our legacy voice and
data networks.
A new Ethernet solution means that we can reduce the number of
separate circuits needed in some networks. This meant that this year we
removed thousands of surplus data circuits from mobile customers sites,
with a view to reducing power consumption.