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  Annual review and summary financial statement 2003
Chief Executive's review
Ben Verwaayen
Ben Verwaayen, Chief Executive, explains that BT will create value for shareholders by its passion for customer service, its focus on profitable growth and its commitment to broadband.
A year ago, I said that there were three main parts to BTís strategy. This year, Iím saying the same thing. First, we have a passion for customers. Second, we have broadband at the heart of BT - and BT at the heart of broadband. Third, we have rigorous financial discipline.

By concentrating on these three priorities we can continue to reward shareholders, drive down debt and invest in the business - where it matters.

First and foremost, we are passionate about customers. Every time we deal with a customer, our goal is to deliver an excellent experience - an experience which is simple, but also complete.

We are working to meet the needs that customers have today. And we are innovating to meet the needs they will have tomorrow.

This means getting ever closer to customers, understanding their lifestyles and businesses, establishing long-term relationships with them. We are proud to serve individuals, families, small or medium-sized businesses, and global corporations.

In the past year, our passion for customers has delivered results. For example:

  • consumers and businesses are now more satisfied with the way we provide and repair their services, as shown by our satisfaction surveys

  • packages such as BT Together, which has ten million residential customers, have been a major success story. From June this year, BT Together will be even simpler, making minute-by-minute charges for evening and weekend calling a thing of the past

  • we are the UKís leading internet service provider for small and medium businesses

  • the order book for our solutions business is very strong and orders worth £3.6 billion were taken during the 2003 financial year, including a major Ä1 billion contract to manage Unileverís worldwide communications network for seven years

  • we promised that our major European operations would break even at the EBITDA level and, thanks to our market success and efficiency programme, we delivered

  • new business revenues among wholesale customers (other telecoms operators and internet service providers) grew by 85% year on year

  • and, very importantly, overall customer dissatisfaction was significantly down by 37% for the company (against the target we set of 25%).

Broadband is the biggest opportunity for growth in the communications market. Itís no exaggeration to say that it will be as important to our future as voice telephone calls were to our past. Broadband is more than just another product. It is a whole new way of communicating. It sparks off tremendous demand and is growing at a rapid rate - connections having increased almost fourfold in the 2003 financial year.

Our record over the past year shows how we are meeting this demand:

  • at 31 March 2003, we had around 800,000 ADSL (asymmetric digital subscriber line) connections, and we are well on the way to reaching our target of one million this summer

  • two-thirds of the UK population is now connected to an ADSL-enabled exchange, and our development of new business models, coupled with technological breakthroughs, could put 90% of the UKís homes and small businesses within reach of broadband services within the next few years.

And as well as signing up customers, we are moving quickly to offer them inspiring new services. Our understanding of what customers want is growing every day and we are making sure that the company is able to provide it. For example, new broadband services were launched, offering music - Dotmusic on Demand, sport - Sportal on Demand, and education - the BT Learning Centre.

Our third key priority is financial discipline. We put our heart into customer service, but also into a rigorous approach to finance.

As the broadband record shows, we have to meet the demands of our customers in a way that also serves the interests of shareholders - in other words, it has to be financially responsible and sustainable.

Financial discipline is not the same thing as cost savings. Itís about doing things smarter, raising the bar, proving that it is possible to do more with less. We did substantially reduce operating costs and, in addition, we very carefully targeted our capital expenditure, which was £2.4 billion during the 2003 financial year, a 21% reduction on the previous year, on a like-for-like basis.

We are investing to transform our network. Equipment designed for 20th century services is making way for a true 21st century network, delivering the broadband, multimedia services that todayís customers require. It will also deliver these services in the way many of todayís customers now demand them - for example enabling customers to configure and adjust their services themselves.

In this network, we are creating a new engine for growth; simultaneously offering lower operating costs and higher performance.

These then are the priorities that we have been focused on in the past year and that we will remain focused on in the year ahead.

Our success will depend not just on making our strategy work but on the way in which we make it work.

The new corporate identity that we unveiled at the beginning of April 2003 defines the kind of company we are now and need to be in the future.

Central to that new identity is a commitment to be simple and complete in all we do. And that, in turn, means living our brand values.

Being trustworthy means consistently delivering on our promises. Helpful means listening and responding. Being straightforward means keeping things simple and clear, and inspiring means constantly working to create new communications possibilities. And we have to do everything with real heart - showing passion and conviction.

Those values, of course, can only be lived through people - and, of course, our strategy can only be delivered by the teams of motivated people throughout the business. It simply couldnít happen without them. They breathe life into it. They make it work. And Iíd like to thank them for their loyalty and their hard work.

Signature Brn Verwaayen

Ben Verwaayen
Chief Executive
21 May 2003

We have seven strategic imperatives:

  • customer satisfaction

  • financial discipline

  • broadband - at the heart of BT

  • value-added solutions for multi-site organisations with European operations

  • a clear network strategy, with unified management of all UK networks

  • a clear strategy for each customer group, including new services and brand extension

  • diverse, skilled and motivated people.

The following pages report on how we are performing against each of these.

Underpinning the seven strategic imperatives is a commitment to the wider community. See our report back on how we have been exercising our corporate social responsibilities.


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