BT 2014 Annual Report Download - page 49

46 The Strategic Report
Delivering our strategy
Cost transformation
Operating costs reduced 1% (201213 4%) as cost eciencies oset
pay ination and the additional engineering resource we recruited
to support bre provision in rural areas. The weather conditions also
impacted our costs in the year.
We are increasing the eciency of our operations through process
improvements, better training, improved tools and equipment for
our engineers, and by recruiting engineers with more exible terms
and conditions.
This year we
• provided over 13,000 new PCs and mobile devices to our workforce
• launched 20 bespoke smartphone apps that simplify or automate a
large number of engineering tasks and
• helped our engineers become more productive.
Investing for the future
We continue to invest in both our network and our people to improve the
service we provide to our customers. This year we
• invested £1.0bn (201213 £1.1bn) in our copper and bre networks
to extend coverage, improve service and increase functionality.
This supports our aim to be trusted to deliver reliably and consistently
• trialled vectoring technology  this could potentially increase our
FTTC broadband speeds to above 100Mbps
• provided 140,000 hours of training (30% more than last year), to
ensure that our people have the right skills for their roles
• recruited around 2,000 people into permanent roles, including 500
apprentices and
• announced plans to invest £50m in the next three years to improve
broadband coverage in UK cities.
Financial performance
Year ended 31 March
2014
£m
2013a
£m
2012a
£m
Revenue 5,061 5,115 5,187
Operating costs 2,460 2,473 2,569
EBITDA 2,601 2,642 2,618
Depreciation and amortisation 1,406 1,428 1,416
Operating prot 1,195 1,214 1,202
Capital expenditure 1,049 1,144 1,075
Operating cash ow 1,492 1,475 1,514
a 5estated, see note 1 to the consolidated Ƭnancial statements.
Revenue declined 1% (201213 1%) as regulatory price changes
had a negative impact of around £260m, the equivalent of 5%.
This was partly oset by 86% growth in bre broadband revenue and a
4% increase in Ethernet revenue driven by higher volumes.
Operating costs reduced 1% (201213 4%). EBITDA and operating
prot decreased 2% (201213 1% increase).
Capital expenditure decreased 8% (201213 6% increase). While our
commercial bre build is nearing completion, we have maintained the
same intensity of overall bre rollout through the BDUK programme.
We received £110m of funding relating to this programme. Operating
cash ow increased 1% (201213 3% decrease).
BT Technology, Service & Operations
(BT TSO)
BT TSO is our internal service unit. It supports
our customer-facing lines of business and has
13,500 people.
BT TSO is responsible for the whole lifecycle of our global networks and
systems  from innovation, design, test and build through to operational
management. It is structured to simplify the way we work, help us
further transform our cost base and improve delivery to BTcustomers.
Our goal is to make our processes more ecient with fewer hand-os
between divisions and higher levels of automation. This will reduce cost.
It will also eliminate process failure which will give our end-customers a
better service. We lead and deliver BTs long-term technology strategy
and research and innovation programmes, including managing BTs
worldwide patent portfolio (see page 28).
We are responsible for managing the groups energy consumption and
for putting strategies in place to cut our carbon footprint.
Products and services
We manage the voice, data and TV networks and IT applications
which make up the core infrastructure for BTs products and services.
Our people also design and deliver the large-scale global managed
network services which are used by our lines of business or sold by them
to customers in the UK and internationally.
Our teams work to improve the service experience of our customers 
from consumers through to major corporations and our big UK
wholesale customers.
We work end-to-end across the group. We analyse and improve
processes that cut across organisational and operational boundaries,
to help BT deliver to customers right rst time.
We make sure that BTs networks and systems run eciently. We close
down those systems that are no longer needed and move our customers
on to better products and services. We are working to improve the
resilience and reliability of our networks so that our customers do not
suer network failure or loss of service.
We work with our lines of business to make sure they make the most of
technology advances across all customer segments and products.
Performance in the year
We have reduced our costs at the same time as improving the reliability of
our IT systems. We have again reduced the groups energy consumption.
Key facts:
Group-wide energy
consumption reduced by 3%
Delivered technology changes
to support the launch of
BT Sport
Improvement in IT systems
reliability for the third
consecutive year
Queen’s Award for Enterprise
2014: Innovation for IPX
BT TSO has continued to drive the groups innovation programme and the
development of our networks and platforms. You can read more about this
on pages 26 to 28.
This year, we reduced our overall managed costs by focusing on Continuous
Improvement (see page 16) and simplication. We have also delivered cost
reductions from insourcing, both by driving productivity gains as we build
specialist skills in our global development centres, and by retraining our
own people to take on work previously done by third parties.