BT Report 2001



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Year ended, or as at, 31 March 2001:

Total turnover	Ł11,813m
EBITDA	Ł1,188m
Operating profit before goodwill amortisation	Ł1,004m
Capital expenditure on plant, equipment and property	Ł157m
Net operating assets	Ł1,114m
Employees	53,600

At 31 March 2001, BT had 28.9 million customer lines (exchange line connections). Around eight million of these were business lines and lines for other service providers. The remainder were lines for residential customers.

In a very competitive market, BT Retail’s strategy is to maintain turnover and EBITDA margins, in the medium term, at 2001 levels by seeking ongoing productivity improvements from existing businesses and new business opportunities in higher value internet and broadband services.

In the 2001 financial year, BT’s operating profit derived predominantly from fixed-network calls in the UK (fixed-network calls comprise calls within the UK and calls made from the UK to other countries). Calls on the UK fixed network accounted for about 28% of group turnover.

On average, about 90 million UK local and national calls are made every day. Call volumes continue to grow. The number of calls made from fixed to mobile phones and the level of internet usage both increased strongly. This largely offset the decline in traditional fixed-line local, national and international call volumes caused by mobile phone substitution and intense competition from other UK operators.

Exchange line turnover, comprising rental and connection charges, accounted for about 18% of group revenues in the 2001 financial year. Revenue from these activities continues to grow, mainly because of the increase in the number of business lines, particularly high-speed ISDN lines. Charges for business lines are higher than for residential lines.

The number of residential lines declined slightly over the year. Since the beginning of 1995, we have experienced a small net reduction in the number of our residential line connections as a result of increasing competition from cable operators, particularly in urban areas. Business connections have shown a steady increase over the same period.

We provide many of our business customers with private circuits. These are lines between fixed points reserved for a customer’s exclusive use and charged at a fixed rate irrespective of usage. Revenue from this activity accounted for approximately 5% of group turnover in the 2001 financial year.

Among the other services we offer are: the sale or rent of communications equipment; public payphones; advanced data and voice services; visual services, including distributing television material for broadcasting organisations and closed circuit television operators; and audio and videoconferencing.

Marketing and pricing
BT has continued to reduce prices and simplify its pricing structure, while at the same time introducing new options to give customers greater choice and control over how they are charged for using our products and services. All of our residential customers (except those on special schemes for low users) now get an inclusive call allowance included as part of the standard rental.

The new BT Together range of pricing plans provides residential and smaller business customers with competitive prices, inclusive call allowances and other features for a fixed monthly fee. From 1 September 2000, customers on BT Together and BT Working Together plans have also benefited from an evening and weekend calling rate of nine pence per minute to 13 of our most popular international destinations.

On 1 December 2000, we launched the new choices package from BT Together. This offers unlimited off-peak voice and/or internet calls for a fixed monthly fee. More than one million of the new packages were sold in the first seven weeks following their launch. Over eight million customers are now benefiting from one of the choices from BT Together. These customers, who account for more than half of our total call traffic, are showing more positive calling trends and lower churn levels than the remainder of our consumer customer base.

SurfTime, BT’s low-cost internet access service, which offers unlimited internet calls for a fixed fee, was launched in June 2000 and has more than 446,000 customers.

An independently audited report, published in January 2001, compared the best prices offered at that time by major UK telecoms suppliers. Five typical residential customer bill profiles were analysed. In each case, BT was the cheapest operator providing nationwide coverage.

BT has also introduced the BT Commitment option to deliver competitive prices to corporate business customers.

Our website, bt.com, provides residential and business customers with an e-commerce channel for accessing information and services for all their communication needs. It has around 1.5 million registered users and, on average, every week some 100,000 users view a bill on the site. Orders for more than Ł100 million worth of products and services were made or initiated through bt.com during the 2001 financial year.

Customer satisfaction
BT’s quality of service and our customers’ satisfaction with that service is extremely important to us. To ensure that our customers are satisfied with our service and to understand ways in which we can improve it, we talk to thousands of our UK customers every month. We also run an extensive market research programme to focus on wider issues and to help us match our product and service offerings to customer requirements.

During the 2001 financial year, specialist market research agencies, acting on our behalf, talked to around 300,000 residential and business customers in the UK about all aspects of the services we provide. We also closely monitor our performance against a number of key business measures, including providing services in response to orders and remedying faults when they appear.

Results for the period October 2000 to March 2001 showed that, despite problems caused by the knock-on effects of the fuel strike in September 2000, the wettest autumn since records began and the outbreak of foot-and-mouth disease in farm animals, all of which made access to customers in many parts of the country difficult, over 97% of business and residential orders were completed by the date agreed with the customer. For provision of services, 82% of small and medium-sized business customers and 87% of residential customers stated that they were satisfied with BT’s performance.

Repair services too came under pressure, particularly from the bad weather and flooding, which increased the number of faults and made it more difficult for us to deal with them. We aim to rectify faults within nine hours for residential customers and five hours for business customers, or by some other mutually agreed time. Despite all the difficulties, we cleared 82% of business faults and 65% of residential faults within these objective times, and customer satisfaction with the repair service was broadly maintained.

To achieve this, as many as 600 BT people were transferred to the most seriously affected areas, we employed over 200 outside contractors to support our efforts, and, for a number of weeks, we deployed over a thousand man days of extra resource per week by employing people beyond their scheduled hours.