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BT
has a significant market share in its main UK markets
for fixed network calls and provision of exchange lines,
although competition has eroded BT’s market
share significantly in key market sectors, in particular
areas of the UK and for certain products and services.
This trend shows signs of slowing in the residential
market and we estimate that BT had 73% of the market
for residential fixed voice calls in the 2003, 2002
and 2001 financial years. Additionally, we estimate
that BT had 45% of the market for business fixed voice
calls in the 2003 financial year, compared with 49%
and 53% in the 2002 and 2001 financial years, respectively.
We also estimate that BT supplied 81% of the exchange
lines in the UK at 31 March 2003, compared with 83%
and 84% at 31 March 2002 and 2001, respectively.
The
growth in cable operators’ networks in the UK has
historically had an adverse effect on BT’s share
of the residential market as a result of increasing
competition from these cable operators. However, in
the 2003 financial year, BT has grown its residential
customer base by 100,000. The cable operators have been
concentrating on financial restructuring and increasing
penetration in current markets. Current and future wholesale
line rental arrangements will allow BT’s fixed
line customers to move PSTN lines to other operators
which are expected to be the source of more competition
in future.
The
group has seen some diversion of demand from its fixed
network as a result of the growth in mobile voice calls
and other licensed operators’ activities. This
diversion may intensify now that BT’s fixed line
customers are able to pre-select their carrier.
Additionally,
BT’s Licence was amended in April 2000 to require
BT to provide other operators with use of the lines
connecting BT’s local exchanges to its customers
and allow operators to install equipment in BT’s
exchanges (local loop unbundling). This amendment took
effect as a result of an EU Regulation which came into
force on 1 January 2001.
For
its operations as a whole, BT expects the competitive
pressure to persist and it will continue to defend its
market share vigorously and fairly.
The
strength of the UK economy is an important determinant
of BT’s business volumes and the gross domestic
product grew by 2.3% in the 2003 financial year, compared
with 1.2% and 2.6% in the 2002 and 2001 financial years,
respectively.
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