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Openreach bashing doesn’t have material impact on BT revenues

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Despite the BT bashing which has been going on for what seems like forever, it would not seem to have had a material effect on the revenues of the organization.

While it has not been a spectacular quarter for BT, it’s has been far from a car-crash. The team met analyst expectations, towed the line and the brand is still proving to be the dominant player in the broadband market despite efforts of competitors to have a dig. Revenues were up 35% across the board, but when adjusted for the EE acquisition, it is still a 1.1% increase at just over £6 billion, beating analyst expectations of £5.94 billion.

The consumer business was the real business here, with mobile-phone, broadband and pay-television units demonstrating healthy growth at 11%. Mobile post-paid net additions stood at 280,000, whereas the broadband business brought in 76,000 customers taking the total base to 4.5 million, a number which the team claim was 65% retail share of total broadband net additions.

“This is a positive set of results, both operationally and financially, and we remain on track to achieve our full year outlook,” said the best looking man in broadband, BT’s CEO Gavin Hasslehoff Patterson. “We’ve made good progress on the integration of EE and the delivery of our synergy targets. Our consumer facing lines of business have performed well, but in the enterprise space, UK public sector continues to be a challenging market.

“Across the group, we continue to drive cost reduction and productivity improvements. Customer experience remains a key priority, and we’re stepping up our investments in the second half of the year. And we’ll continue to invest in our ultrafast and 4G plans in 2017 and beyond.”

Kick back to the shareholders has also increased which may give the team a bit of breathing room should it wish to spend a bit on its customers. Customer experience is the new battle-ground for all consumer facing brands, and BT is not exactly killing it in the rankings. BT is not entirely to blame here as the telco industry on the whole is pretty rubbish compared others.

“It’s interesting that the consumer part of BT’s business is continuing to drive growth for the company, and makes sense that it plans to spend more on improving experience in the second half of the year,” said Ben Rubin, Development Director at EY-Seren, an agency that helps companies deliver better customer experience. “BT knows consumers are willing to spend more for a good experience, whether that’s relating to product features, reliability, trust or other factors.

“BT has made big investments and achieved some success in improving its customer satisfaction, but there is still significant room for improvement. Customer satisfaction scores from Which? And Ofcom are still below average, and our own research this summer found more people would actively discourage friends and family from using BT than recommend its products or services.

“With consumer playing a very important role for BT right now, improving experience in these areas will be key to retaining the customers it has gained through expanding its offering, and sustaining momentum in the long run.”

On the Openreach side of things, the team has said it achieved 440,000 fibre broadband net additions, with 50% coming from external service providers for first time. The team also claimed to have made “good progress” in clearing long tail of outstanding Ethernet orders in Openreach, as well as being ahead on all 60 minimum service levels and on track to halve missed appointments this year.

While this could be seen as positive news, it is unlikely to comfort competitors in the industry who have long been calling for the breakup on the Openreach/BT relationship. Broadband players such as Sky and Vodafone will likely feel Ofcom bottled its decision to restructure BT, with many industry commentators believing the regulator didn’t go far enough in its decision. We polled Telecoms.com readers just after the decision was announced with 53% believing Ofcom should have gone further, forcing BT to sell up.

Although BT has been going through a tough couple of months, taking abuse and flak from a variety of angles, these financial results do demonstrate one thing – that BT is still the dominant player in the UK, and that is unlikely to change in the near future.


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