11 May 2018
| Alan Burkitt-Gray
Revenue and profit of BT’s Global Services division and its Wholesale and Ventures divisions were both down sharply last year.
A close reading of yesterday’s BT results
– when it announced 13,000 job losses over the next
three years – shows that its wholesale and enterprise
activities are both suffering badly.
Most of those 13,000 will be among managers and professionals,
while BT’s Openreach last mile division will 6,000
more people to speed up network deployment.
The only light for any of BT’s wholesale
operations came from Openreach, which showed revenue up
marginally – though even this division, which runs
last-mile fibre and copper in the UK – reported
Global Services showed annual revenue down 9%; underlying
revenue excluding transit was down 8%. EBITDA was down 12%.
Wholesale and Ventures showed revenue down 5% and EBITDA down
There was hardly a division of BT that did not have bad news.
The mobile unit, EE, was one of the exceptions, with revenue up
4% and EBITDA up 17%. Consumer, which includes BT Sport, showed
revenue up 3% – approximately the UK’s
current inflation rate – but EBITDA up just 1%.
Overall BT’s revenue was down 1% but EBITDA was up
2%. Net debt was up 7.7% to £9.6 billion.
CEO Gavin Patterson tried to put an optimistic spin on it. "BT
is uniquely positioned to be a leader in converged connectivity
and services," he said. "I am really excited to be delivering
the next stage of BT’s transformation."
A number of commentators questioned that last sentence, with
some suggesting that Patterson’s future at the top
of BT was in jeopardy – especially as the
company’s share price was down sharply from
£2.38 at the start of Thursday to £2.19 at the end
of the day.
The fall over the past year is even more significant: it peaked
at £3.17 in late May 2017. Go back to late November 2015
and BT shares were selling at almost £5 each.
Dave Millett of a broker called Equinox told the
thisismoney.co.uk website: "I cannot think of many chief
executives that have survived that kind of share price drop, so
the stakes are very high for Patterson now. … He may
find that he ends up being one of the 13,000 casualties."
Another, George Salmon, of Hargreaves Lansdown, questioned
whether the move was enough. He told the same site: "13,000 job
cuts and a move out of central London are drastic actions and
should help deliver cost savings. But they still
aren’t enough to dig BT out of the hole
It has also announced that it will move out of its headquarters
in central London and concentrate activities on "30 modern
strategic sites", with the aim of "reducing the inefficiencies
that exist by being housed in numerous sites across the
BT will offer further developments next week, when it announces
changes to its consumer operation.
CCS Insight’s Paolo Pescatore, VP for multiplay
and media, commented: "It’s been a while since BT
acquired EE and we’ve yet to see significant
benefits from the deal given the ongoing challenges facing the
overall group. With this in mind it is unsurprising that some
of the successful executives at EE have now secured key roles
as part of the new entity."
Pescatore said that Marc Allera, the former EE executive who is
now CEO of the consumer division of BT, "has a lot to ponder
and faces some tough decisions with the integration of the
consumer units. His strive for simplicity and customer-friendly
approach will put the new entity in good stead."
The analyst warned: "He now needs to take a broader role beyond
mobile and individual consumers and more about household
Mark Newman, chief analyst at the TM Forum, said: "The BT
layoffs illustrate two major challenges facing the telecoms
industry: culture and vision." He warned: "Many large telecoms
companies are struggling with digital transformation, because
of a hierarchical, slow and risk-averse organisational
He warned that many telcos "are stuck in 20th century ways of
working, [with a] lack the vision and leadership". They need
"to become more customer-centric and focussed on opening up new
digital ecosystems, including IoT, smart-manufacturing,
digital-health and smart-cities. This is starting to happen,
but progress is too slow."
Pescatore added: "The new organisation structure and strategy
cannot come soon enough. However, in reality it will be some
time before this comes into effect and lot can happen given
Meanwhile, former Openreach CEO Liv Garfield last night was
named Veuve Clicquot Business Woman of the year. She is CEO of
the quoted water and sewage company Severn Trent, which last
year had sales of £1.8 billion and income of £543