Chief Executive's statement
This is the last time I shall be writing to BTs shareholders as Chief Executive, so I should start off by saying thanks for your support and for the dialogue we have shared over the past six and a half exciting
years. During that time, Ive had the privilege of leading your company on an amazing journey from a UK-focused lines and calls business to a global communications services company.
Leadership has a limited shelf-life. The time comes in any organisation when it is good to refresh the leadership. Well-managed companies plan ahead for a smooth succession to a new leader. And thats just what
weve been doing. I have fought a battle between my heart, which tells me to stay with this great company, and my head which says its time to go. Finally my head has won!
proud of the fact that todays BT is a company with such strength and depth
that we have been able to appoint our new Chief Executive Ian Livingston internally.
Ian is a great guy who is supported by a world-class team and I know I am leaving
the company in the best possible hands. New leaders set organisations new challenges
and pose new questions. Im
confident that Ian and his team will be doing just
Delivery through transformation
By following a consistent strategy
we have created a business model in which delivering consistent financial improvement
has become a habit. We have delivered 24 consecutive quarters of growth in EPSa (earnings
per share). Back in 2002, EPSa was
9.0 penceb per share.
Fast forward six years, and that number is 23.9 pence per share. Thats
grown more than two and a half times.
2002, recognising that parts of our traditional business were in decline, we
adopted the strategy of growing new wave revenue from broadband, mobility
and global networked IT services. In 2008, new wave activities accounted for
39% of total revenue. The new wave really has become business as usual.
absolute commitment to delivery has underpinned the transformation of the UKs communications infrastructure, one of UK plcs
most vital assets.
Take broadband. In April 2002 when we first
set targets for broadband, there were just under 150,000 DSL connections in the
UK. When we said we would achieve five million connections in five years people
were crazy. In the end we achieved ten million.
loop unbundling (LLU) which enables other communications providers to offer their own services with their own brand and pricing structures over the BT network has triggered one of the most
fundamental changes in the communications industry in a generation. A couple of years ago, we were aiming for a target of 1.5 million unbundled lines for non-BT communications providers. At 31 March 2008 wed
reached 4.3 million.
Operationally 2008 was a very strong year in which we continued to deliver for customers around the world.
A global company
A year ago I made the point that all our customers are increasingly thinking and acting like global citizens. If BT is to continue to deliver for them we have to be a global business with local presence and
being where our customers want us to be, bringing our customers the best services
from around the world, understanding local customs, and thinking global in everything
we do. We operate in over 170 countries and are serving customers worldwide.
Our non-UK revenue was up 18% in 2008 and accounted for 17% of the groups
We have a long-established
presence in North America and continental Europe, but were also
increasingly committing to exciting and fast growing markets such as Asia Pacific,
Latin America, the Middle East and Africa, and Eastern Europe. We have been building
a genuinely global workforce with 17 nationalities represented in the
companys top 200 managers. During the year, we opened new R&D facilities
in China and Hungary and a shared services centre in India. And we continued
to win and deliver on a wide range of long-term global networked IT services
contracts around the world. In Asia Pacific we have witnessed spectacular
revenue growth of 66%.
Delivering a better network
Openreach access network business may only have been in existence for a couple
of years, but it has made great progress in its drive to deliver a better network.
Set up to ensure equal access to the first mile of
BTs UK access network, it has been focused on providing a local access
environment in which its customers businesses
The results speak for themselves.
During the 2008 financial year, Openreach reduced the average lead times for the provision of services to businesses by 40% and those offered to consumer customers by 54%. Of course, delivery is also about putting
things right when they go wrong. Lead times for business repairs improved by 54% and for consumer repairs by 44%.
Transforming our wholesale business
The success of LLU has reshaped
the competitive landscape in the UK. It certainly changes the nature of our wholesale
business. Wholesale revenue declined in the 2008 financial year, in part as a
result of volume decreases resulting from migrations to LLU. This came as no
surprise, and we have a strategy in place to deal with the change, seizing the
opportunity to reposition ourselves as a leading provider of wholesale managed
industry migrates from traditional to next generation services we can help our
customers negotiate this transition and transform their businesses. During 2008,
we signed a number
||Before specific items and leaver
||From continuing activities before
goodwill amortisation and exceptional items, reported under UK GAAP.
||Its a pretty
story and Im very proud
to have been associated
| Ben Verwaayen
|| Chief Executive
of major managed network services contracts
worth a projected total of £1.8 billion over their lifetimes. These range
from a major outsourcing contract with the Post Office to providing enhanced
mobile operators T-Mobile, Orange and Virgin Media.
New communications possibilities
In a highly competitive retail market, we have continued to wow our customers with new communications possibilities. Consumer customers can now choose from an innovative range of broadband services, including BT Total
Broadband Anywhere which ensures that the broadband experience is available all the time, at home and on the move. Or they can tune in to new possibilities in entertainment. BT Vision, our next generation TV service, already offers a rich selection
of content with much more to come. The emphasis with our SME customers is to help them succeed by letting them do the things they do best while we look after their IT and communications needs. They can run their businesses while accessing the type
of IT and communications services previously available only to larger corporations.
The people who make it happen
So, BT is a company with a strong track record of delivery. We have proved that we will deliver what we promise and we have proved that our commitment to innovation really makes a difference for our
none of this could have happened without the creativity, skills and enthusiasm
of BT people. And Id like to thank them all for the unwavering support
theyve given me and for their unflagging
commitment to our strategy. In one sense the story about the way this business
has changed in the past few years has less to do with broadband or LLU or earnings
per share. Its a story about people. Specifically, its
a story about people who are proud to work for the company, who have dared to
dream and who recognise the absolute importance of meeting the needs of their
customers now and in the future.
think its a pretty inspirational story and Im very proud to have
been associated with it. The more that I see the results coming through in this
business and the more I see BT people stepping up to the challenge, the more
convinced I am that this company will continue to do great things in the future.
14 May 2008
|| Ian Livingston
It is a great honour to be
taking over from Ben Verwaayen as CEO of one of the worlds great
companies. Since joining the BT Board in 2002, I have worked very closely
with Ben and
have seen up close the passion and leadership he has brought to the job.
He has transformed the company, restored the pride of BT people, and placed
us on a course towards further profitable growth and a future full of exciting
across the markets in which BT operates there is no shortage of people
who are focused on the challenges, but I and the rest of the management
we have established ourselves as a world leader, helping multinational
organisations transform themselves to get the most out of globalisation.
rapid growth of emerging economies and of world trade puts us in pole position
provider of networked IT services.
the UK, demand for broadband everywhere and for new services to be delivered
over broadband means the next five years are shaping up to be just as stimulating
and full of commercial opportunity as the
need to seize these opportunities while keeping a relentless focus on being
number one for customer service. We must deliver the financial returns that
our shareholders have every right to expect, and work hard to create a regulatory
climate in which we can continue to invest for the future.
take on my new role very proud of what BT has achieved under Bens
leadership, and certain that the coming years will be more exciting still.