Saturday, 25 May 2019

BT's new CEO sets out his vision for next-gen connectivity in 2019

By Chris Kelly, Total Telecom
Thursday 09 May 19

BT says that 2019 will be a crucial period for connectivity in the UK, as the country's biggest telco aims to launch 5G services and step up its deployment of FTTH fixed line services

BT's new chief exec, Philip Jansen, has set out his desire to reinstate BT as a "national champion" in an earnings call with journalists on Thursday morning. Jansen said that BT would continue to invest heavily in 5G and full fibre fixed broadband services, as the company looks to continue leading from the front in both fields. The BT premier reiterated his company's desire to focus on providing its customers with an expanding portfolio of converged products and services, built on the bedrock of ubiquitous, next generation connectivity. "Our aim is to deliver the best converged network and be the leader in fixed ultrafast and mobile 5G networks," he said. "We know that combining 5G mobile with fixed line fibre to the home services creates a very compelling proposition for our customers…

BT's new chief exec, Philip Jansen, has set out his desire to reinstate BT as a "national champion" in an earnings call with journalists on Thursday morning.

Jansen said that BT would continue to invest heavily in 5G and full fibre fixed broadband services, as the company looks to continue leading from the front in both fields. The BT premier reiterated his company's desire to focus on providing its customers with an expanding portfolio of converged products and services, built on the bedrock of ubiquitous, next generation connectivity.

"Our aim is to deliver the best converged network and be the leader in fixed ultrafast and mobile 5G networks," he said.

"We know that combining 5G mobile with fixed line fibre to the home services creates a very compelling proposition for our customers," he added.

Overall, BT revealed a strong set of figures for FY 2018/19, with revenues hovering around the £23.4 billion mark, down 1 per cent from FY17/18. However, the group saw a healthy 6 per cent jump in after tax profit to £2.159 billion.

Analysts greeted the figures with measured optimism, saying that BT now needed to deliver on its plans for the future.

“In cut throat market like the UK, there are few opportunities to grow. Moves to accelerate plans for its fibre broadband rollout, 5G and cross selling existing services can help increase the group’s bottom line but also requires significant investment,” said telecoms and tech analyst, Paolo Pescatore.   

“In essence, the new CEO needs to consider a radical new strategic approach including the future of global services, Openreach and the importance of costly sports rights. BT is still uniquely placed given its vast network assets. There are no more excuses, it must now execute,” he added.

 

Fibre First – 15 million by mid-2020's

While Openreach is technically now a legally separate entity from BT, the company's fixed line strategy will continue to be of key importance to BTs success. Openreach's Fibre First programme has seen the company dramatically sharpen its focus on the rollout of full fibre, FTTH connectivity. Openreach has now passed 1.2 million properties with FTTH services and is currently passing an additional 20,000 properties per week. Openreach has ambitious plans to accelerate this rollout further, something which will underpin the delivery of the converged services upon which BT's chief exec intends to hang his hat.

"Today we are announcing an increased target to pass 4m premises with ultrafast FTTP technology by 2020/21, up from 3m, and an ambition to pass 15 million premises by the mid-2020s, up from 10 million, if the conditions are right, especially the regulatory and policy enablers," said Jansen.

This increased target for FTTH rollout came with BT's ever-present caveat that the raised targets would be achieved only if "economic conditions were right". However, to his credit, Jansen said that BT was becoming "increasingly confident in the environment for investment in the UK". Given that CityFibre, Gigaclear and Hyperoptic have each attracted hundreds of millions of pounds of private investment for their FTTH programmes in recent months, that could be seen as a pretty safe assumption.  

BT's current capex forecast stands at £3.963 billion for 2019/2020. Jansen said that this was suitable for the rollout of the first iterations of 5G in the UK and working towards providing 4 million FTTH connections in the UK by 2020. However, he conceded that BT would need to raise more cash if it was going to hit the elevated targets it has set itself in the future.

"If economic conditions are right and we are able to scale up to 15 million FTTH connections by the mid-2020s, then we will need to also scale up our capex [in the years ahead]," he said.  

 

5G and the relationship with Huawei

Launching 5G in the UK in the second half of 2019 will be a huge endeavour, but being the first telco to deliver next generation mobile network services to the UK will represent a massive feather in the cap for BT.

Inevitably, it wasn't long before Jensen was asked about BT's relationship with Chinese tech giant, Huawei. The UK has come under strong pressure from the US to ban Huawei from its 5G rollout programme, on the basis that the US believes it poses a security risk to its own interests. The UK has so far resisted the US calls to exclude Huawei, pointing to a 15-year working relationship that has fuelled technological innovation in the UK.

"We will continue to monitor the situation carefully. We have our own robust controls and mechanisms in place. We continue to utilise a multi-vendor strategy for our network equipment," he said.

BT currently uses Huawei extensively in the Radio Access Network of its 4G networks in the UK. When BT acquired EE in 2016, Huawei was also involved in the network core, however, in a decision that pre-dates the current security allegations, BT is in the process of removing Huawei technology from EE's core.

"To be clear, we will continue to use Huawei in the Radio Access Network portion of our 5G network," Jansen said.   

 

Global Services and the prospect of further redundancies

Revenues for BT's Global Services division fell by 6 per cent to £4.735 billion in FY 2018/19. BT has previously announced a three-year business plan for the division that will see a raft of redundancies, across the Global Services division.

Jansen confirmed that BT would be sticking to the plan but had no plans to announce any further lay-offs.  

"There are no further plans to change our headcount – we have a good plan in place and we are sticking with it," said Jansen.  

"We needed to simplify operating models in the UK and transform our Global Services division, delayering management positions.

"Global Services will continue to focus on its top 800 customers. We are tidying up the edges of the Global Services division but the fact remains that Global Services is in a much better position than it was before. 

 

Also in the news:

EE will use WIFI to show off 5G at Glastonbury 

BT and Nokia boost capacity ahead of 5G launch in the UK

BT says 'no thanks' to rural roaming in the UK

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