With LLU coverage around the 70% mark and line rental and call deals being pushed heavily it is surprising to see such upbeat results from the BT Group. Part of this is down to the group repositioning itself from being a simple telephone service company to a complex web of interwoven business groups delivering a wide variety of services.
Overall there were some 12.7 million broadband customers at the end of March 2008, this includes unbundled connections which still use an Openreach copper telephone line. BT Retail had some 4.4 million customers, and LLU accounts for 4.3 million lines. The last quarter saw some 499,000 connections, of which some 30% were with BT Retail (150,000 net additions).
BT Wholesale saw its revenue dip by 12% in the fourth quarter; broadband brought in £54 million less revenue due to price reductions which were worth £24 million and another £30 million due to the continuing migration to LLU connections. One interesting point was that premium rate services (PRS) saw a decline in revenue, which perhaps reflects the various telephone competition/voting problems that have plagued UK media recently.
BT Openreach was the recipient of some of the revenue lost by BT Wholesale, since it saw an increase of £45 million in revenue from other communications providers, but this was balanced out by the loss of revenue from other lines of business within BT. The last quarter saw some extra 600,000 LLU lines connected.
BT Retail seems to be holding its own with reasonable growth in subscriber numbers. Its expansion from just calls and broadband is reflected in its Home IT Support Service having some 41,000 customers, up 18,000 during the last year. BT Vision the FreeView/IPTV hybrid has reached a total of 214,000 customers, with 94,000 net additions in the last quarter. The average number of views of VoD content per subscriber per month is 29.
The 21st Century Network seems to be progressing, and the result is it is already delivering cost savings of the order of £600 million. As yet 21CN has not really impacted the average broadband user yet. The broadband product Wholesale Broadband Connect should reach a critical mass during 2009, and the investment needed from providers to exploit the service appears to be slowing down the release of retail products. 21CN, when completed, promises a much more integrated and software driven system which should make service switching cheaper and quicker and the roll-out of new products faster.
Ian Livingston, the incoming Group CEO, has a tough job ahead. The next few years are crucial in deciding where BT will be in the next twenty to thirty years. Ben Verwaayen brought BT kicking and screaming into the broadband arena, but the time for the next leap forward is due.