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Capital
expenditure on plant, equipment and property (excluding
the movement on capital accruals) totalled £2,445
million in the 2003 financial year, compared with £3,908
million and £4,986 million in the 2002 and 2001
financial years, respectively. Of the total capital
expenditure, £3,100 million and £3,857 million
were in relation to the group’s continuing activities
in the 2002 and 2001 financial years, respectively.
The reduction in the level of capital expenditure reflects
continued management focus and tight control. 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.
Capital expenditure is expected to rise in the 2004
financial year as the group invests in its 21st century
network programme.
Capital
expenditure in relation to the group’s discontinued
activities amounted to £808 million and £1,129
million in the 2002 and 2001 financial years, respectively.
Prior to the demerger, mmO2 continued improving the
quality and capacity of its digital GSM network. 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. A third generation
mobile licence in the Netherlands was awarded to Telfort
in July 2000 for £267 million.
Of
the capital expenditure, £138 million was in Europe,
outside the UK, in the 2003 financial year and £634
million was spent there in the 2002 financial year.
Contracts
placed for ongoing capital expenditure totalled £616
million at 31 March 2003. We plan to develop the 21st
century network using stringent capital return criteria
and a rigorous approach to any investment in the narrowband
network. The 21st century network aims to deliver long
term, structural cost reduction, as we progressively
migrate onto a simpler, lower cost network architecture.
BT expects that future capital expenditure will be funded
from net cash inflows from operating activities, and,
if required, by external financing.
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