BT has said it is on course to turn around its troubled Global Services division, having cut 5,900 jobs in the unit as part of a total group cull of 35,000.
The networking and telecoms giant also confirmed reports it will roll out fibre optic broadband to two thirds of the UK by 2015, costing £2.5 billion. One quarter of UK homes will have direct fibre connections to their property, promising download speeds of up to 100 Mbps – the rest will have 40 Mbps.
Last year, BT hit a £244 million loss after writing off £1.6 billion from the value of Global Services. But the company reported today that it hit a £1 billion profit for this financial year, ending 31 March. A further £900 million will be cut from group costs, it said, as a result of the job cuts and improvements in systems and processes. BT spends £1 billion annually on its own networking and IT costs.
BT Global Services turned its own £1.3 billion unit loss for 2009 into a £457 million pre-tax profit this year, after the job cuts, and “simplification of processes, systems and networks”. In the last quarter, the division took in £100 million revenue “primarily due to the delivery of significant contract milestones”, it said in its annual financial report.
BT made no mention of a reduced-scope contract with the NHS for the £1 billion National Programme for IT, or of reported problems on its £1.7 billion Thomson-Reuters networking deal, but insisted it now takes a “more cautious view” on the income expected from its Global Services work.
The division’s order intake hit £6.6 billion in the year, including a contract extension with the Department for Work and Pensions to provide voice, data and contact centre solutions, and deals with Wolverhampton City Council for Ethernet, BA for contact centre services, and with Sainsbury for networking. Jeff Kelly, chief executive of Global Services, said the business had been “stabilised”.
But a newly-announced move to expand its IT business in Asia - BT says 80 percent of customers “are expanding” in the region - drew immediate criticism from analysts. Veteran IT expert Anthony Miller, of TechMarketView, said the move was “worrying” and “rings all sorts of alarm bells”.
Miller said BT had attempted such a move before, without success, and that aims to be another HP or IBM would be “flawed”. He added: “We have said many times before... that BT Global Services should stick local.”
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