BT faces stagnation as market share falls

20 May 2004

The UK’s dominant provider of wireline services, BT Group, has reported its results for the fiscal fourth quarter for the year to the end of March 2004, just a day after Ofcom published its most recent market report on the country’s telecoms market as a whole. The former monopoly said that net income for the quarter fell to GBP303 million (USD537 million) from GBP1.65 billion a year earlier – fourth quarter 2002 results were inflated by the sale of BT’s stake in Cegetel of France – while sales remained static at GBP4.78 billion. Net debt stood at GBP8.43 billion. The operator has been concentrating on its broadband offering in recent years in a bid to boost revenues and at the end of March 2004 claimed 2.45 million wholesale broadband lines.

Ofcom’s Fixed Line Telecoms Market Information Update confirms that BT’s fixed line operations are beginning to stagnate, revealing its shrinking revenues and market shares in a fixed line market that is struggling to compete with the mobile sector. Ofcom said that BT’s share of business call revenues slipped to 48.9% at the end of fiscal 2003, falling below 50% for the first time. The operator’s share of revenues from residential customers stood at 68.9%, down three percentage points on the previous year, while revenues for the fixed line market as a whole dropped 5% to GBP12 billion.

Meanwhile the government has abandoned support for a campaign to keep BT from being broken up, sparking speculation that the operator’s various operating arms may be spun off into separate companies. The government’s move leaves BT’s rivals to continue pressing for the break up of the PTO; they believe that separating its network assets from the rest of its business would increase competition in the market. Ofcom is currently carrying out a wide scale review of the industry, and agrees that some fundamental changes need to be made.

United Kingdom, BT Group (incl. Openreach)
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