Group results

Group revenue – new wave and traditional

In 2008, group revenue increased by 2% to £20,704 million. This compares with growth of 4% in 2007 and 6% in 2006.
New wave and traditional revenue          
(£m)                
New wave and traditional revenue                
           
           
           
           
  blue_box  New wave      
           
  green_box  Traditional      
           
           
           
 
     We split our revenue between new wave and traditional services. New wave revenue principally comprises revenue from networked IT services, broadband and mobility. Traditional revenue mainly comprises revenue from fixed calls and lines, global carrier, circuits and transit. Reporting revenue this way is consistent with our strategy to pursue profitable growth in new wave markets whilst defending our traditional business.
     New wave revenue was £8,043 million in 2008 (2007: £7,374 million, 2006: £6,282 million). The rate of growth slowed to 9%, compared with 17% in 2007 and 38% in 2006, reflecting the growth in the absolute value of new wave revenue. New wave revenue now represents 39% of total revenue compared with 32% in 2006. The continued increase in new wave revenue reflects the success of our strategy to pursue profitable growth in new wave markets. Revenue from networked IT services, broadband and mobility all grew strongly. Revenue from networked IT services increased by 10% to £4,841 million (2007: £4,386 million, 2006: £4,065 million) and broadband revenue increased by 10% to £2,219 million (2007: £2,016 million, 2006: £1,459 million). Mobility revenue increased by 18% to £348 million in 2008 (2007: £294 million, 2006: £292 million).
     Traditional revenue was £12,661 million in 2008 (2007: £12,849 million, 2006: £13,232 million). The rate of decline slowed to 1%, compared with 3% in 2007 and 5% in 2006, reflecting our robust defence of the traditional business in a highly competitive market. The decline in traditional revenue includes the impact of a reduction in low margin transit and premium rate services volumes.
     Revenue from new acquisitions in the year was £245 million in 2008 (2007: £192 million, 2006: £82 million).
     Given the nature of our new wave activities and their relative immaturity, the profit margins we generate from these activities are currently lower than those from our mature traditional products and service offerings. The adverse impact on our overall profitability has been mitigated by overall growth in revenues and our cost efficiency programmes which have achieved savings of £625 million in 2008 (2007: £500 million, 2006: £400 million). Our expectation is that we will continue to pursue profitable growth in new wave markets, defend our traditional business and generate sustainable cost efficiencies.

 

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