The road to recovery

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Conquering the world: BT aims to diversify its business portfolio under CEO Ben Verwaayen.

When Matt Bross first joined BT Group back in 2002, the company was suffering heavily from debt stemming from its past as a government-owned entity. The group had lost US$4.3bn the previous year and needed to evolve quickly to adapt to the ever-changing ICT industry.

Today however, the company has achieved a full recovery and, as seen in its most recently released results, looks to be in a very strong position going forward.

In Q3 of 2006, the company posted overall revenue figures of US$9.96bn, representing an increase of 5% on the previous year.

Revenue from new wave projects climbed 17% on the previous year reaching US$3.65bn and making up 37% of overall revenues. And on the subscriptions front, the company added 697,000 additional broadband customers in Q3 2006 alone.

So how has the group, that is now worth around US$40bn a year, made such a strong turnaround? In recent years, the business has developed into four divisions: BT Global Services, Openreach, BT Retail and BT Wholesale. Launched in 2005 and instigated by Ofcom — the regulator for the UK’s communications industry — Openreach was designed to ensure that other communications providers had exactly the same operational conditions as parts of the BT Group. In August 2006, BT acquired online electrical retailer Dabs.com for around US$59.5m.

In 2005 the company also won a US$3m deal with newswire Reuters to become its supplier of network services over the following eight years. By investing 75% of its total capital spending, estimated to amount to US$19.45bn over five years, on its new Internet Protocol (IP) network, the company is expected to make huge savings. In fact, by the time the transition to the new network in complete in 2010, the group is on target to save US$1bn per annum.

By 2008, 50% of UK customers are expected to be converted to the ‘21st Century Network’.

With CEO Ben Verwaayen at the helm, the business continues to diversify and expand its reach across the globe. With a presence in over 170 different countries, BT has now set up offices in Dubai, Oman and the Kingdom of Saudi Arabia.

It also serves customers in Bahrain, Egypt, Iran, Jordan, Kuwait, Lebanon, Syria, Qatar and Yemen. The Middle East looks set to be one of BT’s fastest growing regions over the next few years.

Between 2004 and 2005 the company clocked a 73% growth in revenue in the region and a 56% increase between 2005 and 2006.

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