OUR STRATEGY

Our strategy is to:

     The successful delivery of this strategy depends on the commitment of all BT people and our continued ability to manage their development and reward them.
     For the 2007 financial year, the KPIs (key performance indicators) against which we measured the success of our strategy were earnings per share before specific items (see Earnings per share), free cash flow (see Financing) and customer satisfaction (see Improving customer satisfaction and service). From the 2008 financial year, customer service replaces customer satisfaction as a KPI.

Pursue profitable growth in new wave markets
In the 2007 financial year, 36% of our revenue was from new wave activities – primarily networked IT services, broadband and mobility – up from 32% in the 2006 financial year.

Broadband at the heart of BT
In the 2007 financial year, we continued our drive to enhance the awareness, availability and attractiveness of broadband. At 31 March 2007, we had 10.7 million broadband lines including LLU (local loop unbundling). In the highly competitive retail market, our market share of consumer and business DSL (digital subscriber line) and LLU broadband connections in the UK was 34%. With 3.7 million broadband connections including PlusNet, we are now the UK’s most popular broadband retailer (including cable).

Create convergent mobility solutions
In a convergent world, individuals and businesses increasingly need to connect and communicate wherever they happen to be, using whatever device they choose, and we offer a range of mobility services in both the consumer and business markets.
     In the 2007 financial year, group mobility revenues were £294 million. The emphasis was increasingly on new services that give customers the best of fixed and the best of mobile communications, either combined in a single handset or bundled together in a compelling offer. At 31 March 2007, we had a total of 314,000 mobile connections in the UK (both GSM and our new, intelligent fixed/mobile service, BT Fusion). In addition, we manage around 100,000 connections on behalf of large enterprise customers, the majority of which are outside the UK.
     The number of customer minutes on BT Openzone (our public wireless broadband service) grew by 60% in the 2007 financial year compared with the previous year.

Defend our traditional business
Although we continue to face challenges in our traditional markets as a result of competition, a shift in our customers’ buying patterns and a tough regulatory regime, we aim to defend our traditional business – mainly calls and lines – while offering customers new, next-generation services.

Active voice customer (customers who generate voice revenue) losses in the 2007 financial year were the lowest for more than three years in spite of intense competition from other providers packaging calls with broadband. This reduced rate of loss was driven by a range of price reductions and by encouraging customers to sign up for our innovative pricing packages.

Transform our networks, systems and services
for the twenty-first century
Our strategy is to build innovative and versatile networks that will be a platform for rapid delivery of new services and simultaneously transform the customer experience and enable us to operate ever more cost effectively. Our 21CN (twenty-first century network), for example, is helping to define communications networks for the future and we are investing in an innovative flexible systems infrastructure throughout BT.

Our UK network
BT has the most comprehensive fixed-line communications network in the UK, with around 5,600 exchanges, more than 700 local and 100 trunk processor units, more than 120 million kilometres of copper wire and more than nine million kilometres of optical fibre, and the most extensive IP backbone network in the UK. The network services we provide include frame relay, ATM (asynchronous transfer mode) and IPVPN (internet protocol virtual private network).

Our global reach
We have one of the broadest IP-enabled networks in Europe and our network-based services extend to and across North and South America and the Asia Pacific region.
     At 31 March 2007, our flagship MPLS (multi-protocol label switching) network service provided coverage and support to over 100 countries from more than 1,300 points of presence. Our MPLS revenue grew by 31% during the 2007 financial year to £556 million.
     Global customer service is provided via service and network management centres around the world, 24 hours a day, seven days a week.

Create long-term partnerships with our customers
We believe that our relationships with our customers are key particularly in a market experiencing major transformation. Understanding customers’ needs and responding to them flexibly, comprehensively and with insight is critical in helping to differentiate us from our competitors. That is why we aim to put the customer at the heart of everything we do – strengthening that relationship and building trust and delivering what we promise. This is encouraging customers to move from short-term contracts based on individual transactions, to longer-term arrangements under which they sign up for packages of services.