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Capital expenditure on
plant, equipment and property totalled £4,986 million in the 2001 financial
year, compared with £3,680 million in the 2000 financial year and £3,269
million in the 1999 financial year. Of the total capital expenditure, £4,260
million, £3,287 million and £3,005 million was in the UK in the 2001, 2000 and
1999 financial years respectively. Work continues on enhancing the intelligence
of the network to enable customers to benefit from advanced services and
improving the network’s capacity to carry high-speed data. We had installed
ADSL equipment in 839 UK exchanges by the end of the 2001 financial year as the
continuation of our plan to roll out this equipment to all our major local
exchanges. We are progressively changing the fixed network from one based on
switched technologies to a modern network based on the internet protocol (IP).
In the 2001 financial year 46 trunk exchanges in the core network were cut-over
to Next Generation Switches (NGS) which have double the capacity of the earlier
exchanges. This brought the total of NGSs to 57 by 31 March 2001. Plans are in
place for introducing a further 13 NGSs and for the upgrade and expansion of 27
of the switches to include core Asynchronous Transfer Mode (ATM) switching by
March 2002, which potentially doubles the port capacity of each switch.
Investment in the access network continued to be driven by demand for both new
copper and fibre lines and by quality and resilience improvement programmes. BT
Cellnet has continued improving the quality and capacity of its digital GSM
network. Of the capital expenditure outside the UK, £632 million was
concentrated in Europe in the 2001 financial year following our acquisition of
Esat, Telfort and Viag Interkom in building out their networks. In the 2000
financial year, £233 million was incurred in North America mainly by Concert
Communications before the establishment of the Concert global venture in
January 2000. Assets in course of construction increased in the 2001 financial
year by £733 million to £1,966 million at 31 March 2001. The increase reflected
the acquisition of businesses in the year, BT Cellnet’s continuing construction
of its networks and further expenditure on ADSL.
As already discussed, in
April 2000, we purchased one of the five 3G licences in the UK Government’s
auction for £4.03 billion, which we paid in May 2000. This 20-year licence
should enable BT, coupled with our existing GSM spectrum, to deliver the next
generation mobile multimedia service to its customers. A third generation
mobile licence in The Netherlands was awarded to Telfort in July 2000 for £267
million.
The group expects capital
expenditure in the 2002 financial year to be around £4.9 billion, of which £1.5
billion would be incurred by BT Wireless. We anticipate BT Wholesale’s capital
expenditure will be £2 billion per annum and BT Ignite’s to be £1 billion per
annum. Contracts placed for ongoing capital expenditure totalled £1.2 billion
at 31 March 2001. We plan to continue to spend on our IP backbone network, in
providing web hosting facilities and continuing the expansion of our networks
to meet the projected broadband demand. We also intend building the new third
generation wireless networks in the UK, Germany, The Netherlands and Ireland.
We are focusing capital expenditure on projects with higher and more immediate
financial returns. BT expects that future capital expenditure will be provided
from net cash inflows from operating activities, our rights offering and, if
required, by external financing. |
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