BT Global Services cuts losses by 40 percent with ‘strong’ order book

BT Global Services cuts losses by 40 percent with ‘strong’ order book

Banks on new markets for future growth

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BT Global Services has recorded a 40 percent improvement in its operating losses following major contract signings in its last quarter.

The company’s total order intake for Q4 2012 was £2 billion, an increase of eight percent year-on-year, and up from £1.6 billion Q3.

In the UK, the company signed a contract with the National Air Traffic Services (NATS) to support core air traffic control operations, and with the South Essex Partnership NHS Trust to provide a 500 site N3 Community of Interest network, which it described as the largest local health network in the country.

Other significant contract signings in the fourth quarter included a £138 million deal with London-based mining company Anglo American, to deliver services across 15 countries in Africa, Asia and Latin America, and a £39 million agreement with NATO for services in more than 70 locations.

BT Global Services reported an operating loss of £85 million in the year to 31 March, a 40 percent reduction on the previous year’s £141 million loss. However, despite revenues in Q4 2012 being down four percent on Q4 2011 (from £2.1 billion down to £1.9 billion), the operating profit for the quarter had risen from a loss of £11 million in 2011 to an £8 million profit this year.

Nevertheless, with the difficult economic conditions in the UK and Europe, the company is taking steps to ensure its future growth by investing in newer markets.

For example, BT Global Services revealed it hired around 200 new staff in Asia Pacific, and that it plans to hire another 200 in Latin America and a further 150 for Turkey, the Middle East and Africa.

Ovum analyst Mark Giles said that the difficult UK SME market was extending to Global Services, which was why the company was pushing the message on emerging markets.

“The outlook for next year is slightly more difficult because of contract milestones that were achieved last year,” he said.

“The interesting area is the investment they’re making in Latin America, Asia Pacific and Africa. It’s something its competitors are also doing.

“It’s about making sure they have the presence and getting contracts in those regions. It allows BT to grab the scale other players have, and about leveraging that scale and building shared services to reduce the cost of delivering services.”

However, he added: "BT Global Services' margin is still a worry for the company, with finance director Tony Chanmugam claiming that operating cash flow for the year of circa £200 million was 'unacceptable' for a division with revenues of close to £8 billion. Legacy network migration is progressing slower than expected, while the European market and select verticals such as banking remain weak."

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