BT profits boosted by contract wins in IT services arm

BT has reported revenue of £5bn in its first-quarter results, fuelled by continued growth in broadband and contract wins for BT Global Services.


BT has reported revenue of £5bn in its first-quarter results, fuelled by continued growth in broadband and contract wins for BT Global Services.

Revenue for the period to 30 June was up 3%, while profit before taxes was up by the same percentage, reaching £658 million.

BT Global Services, the IT services arm of the telecommunications giant, was a key contributor to the results.
The division has signed contracts worth £1.7bn for the first quarter and £9.2bn over the last 12 months. The deals, which include a managed services contract with the Post Office, and an access network contract with T-Mobile, contributed to the revenue jump.

BT chief executive Ben Verwaayen said: "There is success across the board. BT Retail's share of the broadband net additions in the quarter was 38 %; contract wins in BT Global Services and BT Wholesale were £2bn; outside the UK we gained more than 100 new customers."

During the quarter, BT undertook a major restructure that moved 21 Century Network (21CN) programme from BT Wholesale, and made it parallel with the One-IT initiative. From this move, BT created two new business units: BT Design and BT Operate. The ambition is to reposition BT Wholesale as an IT and software-orientated company that offers managed services contracts, bundling IT and software, to its enterprise customers.

Verwaayen commented on this initiative when announcing the results, stating stated BT was "keeping ahead of the game by delivering software driven services that will offer faster, more resilient and cost effective service to our customers."

This move illustrated that the telecoms giant is "no longer a traditional telephony-only business", according to industry analyst Mike Cansfield, telecoms practice leader at analyst Ovum.

"We have been critical of telcos in the past, including BT, for being far too technology-led. Innovation is often seen in terms of technology rather than services provided to customers. Over the past year the biggest developments in the industry have been service-led (eg Facebook) rather than technology-led," he said.

Cansfield credited BT for launching a series of "service-led initiatives", such as BT Tradespace a social networking portal for SMEs, that demonstrate BT "now sees innovation as not just a new piece of technology".

The growth of BT Global Services, "the star of the past few years", is also slowing down, according the Cansfield, while BT Wholesale is increasingly looking like the star performer.

"Whilst this doesn't show in the results yet, the managed services wins with T-Mobile and Royal Mail show that it is now more than the connectivity supplier it has been in the past. If it can continue to win deals of this type under new CEO Sally Davis, then it will demonstrably show that investment in 21CN was a means to turn the network into a source of new revenues and much more than a network upgrade."

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