BT Group Results

The Financial Times Opinion on BT's results talks about the strategy risking a Kodak moment, in doing so they fail to address the Elephant in the Room. This must be music to the ears of  CEO Gavin Patterson.

If the Company is to be turned around, then the job cuts need to be about the closing of businesses that have no future and the loss of 13,000 members of staff is not enough.  Global Services is not a business that works and looks more like Carillion than a magic money tree. The idea that BT Vision can get customers to pay more for services that are not core  has been proven wrong and thus is now the time to close the business?

Yet these plans were not addressed in the presentation rather short terms issues of investment in Next Generation Investment and statutory requirements for funding Pension requirements where the focus. 

If BT Group is to be turned around I do not think that Gavin Patterson is capable of leading the job, and that they need to find talent from outside the company capable of leading the restructure as well as changing the relationship with regulators if the business is to have a future. 

Will the real BT stand up?

Over the weekend I read three stories about BT which paint a confused view of just what it's future might be. On Saturday the Guardian reported that thanks to BT TV complaints have shoot up. The Yesterday's Sunday Times had two stories in the Business Section about the return of BT Mobile and a feature on NEW CEO Gavin Patterson's £2bn bet on sports TV.

If you read on paper you get the view that BT's retail strategy is in need of a major review. The customers are unhappy with the failings of not just it's TV product but also it's Broadband product. The only provider that gets more complaints for it's Broadband is EE.

Read the Sunday Times and all is good for BT it's about to get back in the Mobile Phone business after leaving in 2001 and BT TV has seen 3M on Virgin and Sky take the service. Then a full page feature on new CEO Gavin Paterson and his £2bn bet on sports TV is a bold gamble that aims to grow the business after a period of cost cutting. He will use a Quad Play offer to drive up incomes having bought some 4G spectrum and struct an MVNO deal with EE.

The problem is that Simon Duke in the Sunday Times does not seem to understand that BT has had MVNO agreements with O2 and Vodafone ever since it sold of it's mobile arm after over paying for 3G spectrum in 2000. He also does not seem to understand that since 2008 BT has failed to invest the money need to provide the long term upgrade in super-fast fibre to the curb rather than cabinet just as it failed to match European spending in ADSL deployment ten years previously.

When you start to understand that last week OFCOM reported that the UK has the lowest consumer prices for Mobile services in Europe you start to ask it's not just Duke that fails to understand the realities of a very competitive telecoms market but BT also.  For too long the Company thinks that one of its prime roles is to defend itself against the regulator rather than invest in it's Network so that it survives long term.  

Thoughts on BT

So Yesterday we had the presentation of the BT results for the last year and the headline analysis can be read on the FT, BBC, Independent and Times amongst other sources.

What gets me is that Ian Livingstone has used accounting tricks to hide what the future looks like. Lookig at BT Retail the core revenue streams are ALL declining and yet the Division managed to increase its profit. Going forward if my own experience is common they will lose even more money, the retention costs for me staying on the BT network are more than the money I am paying them the poor user experience means that I have stopped using BT Vision on demand services.

The Cost Cutting plan is a recruitment freeze rather than intelligent restructuring of the Workforce. This is because of the fact that we are looking at the heavy unionisation of the Openreach division which could become a car crash similar to Global Services (Talk Talk and Tiscali merging will lower the number of truck roles for LLU). If the cost base in GS is wrong why has so little been written down on the Balance Sheet and why are we not seeing large scale redundancies in India of BT staff?

However the big issue I have with Livingstone is the lack of a Vision when it comes to the future. In the middle of the Digital Britain review would his predecessor have stayed quite or used the annual results as an opportunity to talk up high speed broadband? With BT needing to become a software company if the investment in 21CN is to be profitable what progress is being made and how will BT be at the centre of new services?

Could the emphasis on fixing the pension fund be because Livingstone and his Board what a nest to rival that of the former RBS Executives under Fred Godwin?