This week I am looking at BT, which announced its third quarter results and new corporate structure earlier this month.
Figures were reasonably strong across the board in the three months to the end of December 2015 and the company highlighted that this was its best revenue performance for more than seven years. Furthermore, consumer line growth was the strongest it has been in over a decade and management are confident that they are on track with their goal of achieving sustainable revenue growth.
The 170-year-old company also took the opportunity to announce its new corporate structure following the completion of the £12.5 billion takeover of the mobile operator EE. The deal, which was given the go ahead by the Competition and Markets Authority, has created the UK’s biggest telecommunications company with over a third of the mobile market share. The new structure will include six lines of business: Consumer, EE, Business and Public Sector, Global Services, Wholesale and Ventures, and Openreach.
Looking forward, the reassuring results and new corporate structure should encourage management to focus more on innovation and the delivery of quality bundled services to clients. However, whilst the strategy to aggressively enter the mobile/quadplay market via the EE acquisition is credible, it does carry with it significant execution risk. On top of this there is also uncertainty surrounding BT’s infrastructure investment and the future of the Openreach division, which maintains and upgrades BT’s national broadband and phone network whilst ensuring that rival operators have equality of access to it. Specifically, the regulator (Ofcom) is due to rule shortly on whether Openreach needs to be structurally split out as a separate company.