BT Doubles Down on Convergence as Revenues Slip

BT reported a 2 per cent drop in revenues for this quarter as the UK’s former incumbent operator emerges from a difficult few months. Over the last few months, BT has faced a shareholder backlash that led to the resignation of long serving CEO Gavin Patterson, as the company’s share price continued its 2-year nose dive to hit £2.0325 per share on the 18th May (down from a high of £4.998 per share in 2016).

BT attributed the fall in revenues to declines in its enterprise business, which offset growth in other areas. A close look at BT’s financials for the period reveal that the company is at something of a cross roads, with plenty of opportunities ahead to improve profitability, revenues and ultimately boost its share price. BT must take the right steps in the coming months to ensure that it fully capitalises on this opportunity.

“The consumer unit seems to be in better shape than other business segments. Uncertainty still surrounds the company given the search for a new CEO. Hopefully this will be announced at its next fiscal half year results. This in turn will provide some guidance to the future direction of the company. For sure, expect more changes and arguably more pain.”

“The market is rapidly changing, and BT is starting to get left behind. It needs to move far more quickly to ensure it is well placed to take advantage of the opportunities that lie ahead in convergence. Undoubtedly the company has all the assets to compete head on with existing and new rivals.”

“The next two quarters represent a key period for the company as it seeks to execute on its new consumer strategy,” said media, technology and telecoms analyst, Paolo Pescatore.

BT will be hoping that its focus on converged services bears fruit in the coming months. Over the last quarter, the company has launched a range of converged services, including its BT Plus and 4G Assure solutions. It also announced plans for its hybrid network, which will harness the combined power of BT’s WIFI, mobile and fixed line connectivity to provide ubiquitous connectivity.

Despite the fall in revenues, BT managed to boost its average return per user (ARPU) by 1 per cent to £37.90. As it focuses on a new range of converged products BT will be hoping for further increases in ARPU. In what could well be his last set of financial reporting in his role as CEO, Gavin Patterson said that he had high hopes for the future.

“We’ve made a good start to the year. We are making positive progress against our strategy. Our customer experience metrics continue to improve and we have seen the successful launch of new converged products including BT Plus, our first Consumer converged offering and 4G Assure, for business customers. Initiatives to transform our operating model have seen a gross reduction in c.900 roles across the Group and improved cost performance,” he said. – Total Telecom