BT 2016 Annual Report Download - page 4

Sir Michael Rake
Chairman
4 May 2016
2BT Group plc
Annual Report 2016
An introduction from our Chairman
This has been a landmark year
for BT. We have completed
the acquisition of EE, helped take
superfast broadband to 90%
of the country and delivered
our best revenue growth
in more than seven years.
Investing in digital Britain
This year we reached the milestone of
bringing our fibre broadband network to
25 million premises. This has been one of
the fastest deployments of fibre broadband
anywhere in the world. Rollout has been on
budget and ahead of schedule. The UK has
the highest fibre broadband availability of
major European countries, delivered at some
of the lowest prices.
Openreach’s investment in its fibre broadband
network, which is open to all providers on
an equal basis, has been key to this progress.
It has been a real success story for the UK.
Being part of the wider BT Group has given
Openreach the confidence and ability to invest
at scale and pace. And we have plans to go
further:
• delivering the minimum broadband speeds
needed for every home to enjoy the most
popular internet services;
• expanding the reach of fibre broadband
beyond the Government’s current 95%
target; and
• taking the UK from a superfast nation to
an ultrafast one - making a fibre-to-the-
premises service more widely available
together with an ambition to bring ultrafast
broadband to 12 million premises by the
end of 2020.
But in order to do this we need regulatory
support and the right policy framework.
We are open to discussions with Ofcom
and industry to achieve a strengthened but
proportionate form of the current model of
Openreach governance to allow it to continue
to invest at pace.
Investing in new products and services
This year we launched our new European
football content and are pleased with the
response from our customers. BT Mobile has
also done well, adding 400,000 customers
in just a year since launch. The acquisition of
EE in January will allow us to bring together
the best UK mobile network with the largest
superfast broadband network, providing more
innovative, converged products and services.
For business customers, we launched a host of
cloud-based services and a number of security
products to help protect organisations from
growing cyber security threats.
Investing to improve the
customer experience
Our customers have benefited from the
investments we have made in our networks
and products. But our customer service has
not been good enough. We are investing more
in this area and hired 900 new engineers and
more than 900 new contact centre agents as
we look to bring jobs back to the UK.
While Openreach hit all 60 of the minimum
service levels set by Ofcom, and the group
ended the year on a good trajectory, we did
not hit our internal targets. We have to do
much better to match customers’ growing
expectations.
Investing in our global presence
We operate across the globe. Around a fifth
of our revenue comes from outside the UK.
The new divisional structure we have put in
place from April 2016 will give Global Services
a sharper focus on serving major global and
international businesses and organisations.
We seek a level regulatory playing field in
support of this and have been encouraged by
progress towards genuine reform in the US
this year and by eorts to implement the EU’s
digital single market.
The upcoming EU referendum creates some
market uncertainty and risk. BT believes that
staying in a reforming EU would be in the
best interests of our business.
Changes to the Board
As disclosed in last year’s Annual Report,
Warren East stepped down from the Board
last May as a result of his appointment as
chief executive of Rolls-Royce. I’m delighted
to welcome Mike Inglis who joined the Board
in September 2015. Mike’s insight and in-
depth experience in the technology industry
will be a great asset for BT and the Board.
Tim Höttges, CEO of Deutsche Telekom, joined
the Board in January 2016. This followed
the EE acquisition which resulted in Deutsche
Telekom becoming a 12% shareholder in
BT. I’m very pleased to have Tim on the Board;
he has already provided valuable advice
and insight.
Rewarding our shareholders
The investments we have made are delivering
for the business and resulted in revenue
growth at the top end of our outlook range
for the year. Our goal is to continue to deliver
sustainable profitable revenue growth.
Together with our cost transformation
activities, this will support long-term cash
ow growth and therefore value creation for
shareholders. As a result of the good progress
in the year, the Board is proposing a final
dividend of 9.6p, up 13%. This gives a full year
dividend of 14.0p, also up 13%.
Our dividend policy is to pay a progressive
dividend. Our confidence in future cash ow
generation means that we expect to grow the
dividend per share by at least 10% for each of
the next two years.