BT trims another slice from its Global Services unit

BT has announced it intends to sell its French domestic operations to Computacenter as it continues to trim down the Global division which caused so much heartache in bygone years.

The transaction is set to complete towards the end of 2020, and while financials of the deal have not been unveiled, BT has said the French domestic business accounted for roughly £104 million across the course of 2019.

“With this agreement we are close to reaching another milestone in the execution of our strategy to make BT Global a more agile business focused on the growing requirements of our multinational customers,” said Bas Burger, CEO of Global at BT.

“I believe this agreement will prove a key step forward for our customers, for our people and for BT. It also offers a positive future for our domestic customers and the people who support them.”

With a greater emphasis being placed on multinational corporations as opposed to domestic businesses, the Global business unit is undergoing a major restructure. This disposal adds to the sale of domestic operations and infrastructure in 16 countries in Latin America to CIH Telecommunications Americas. At the end of 2019, BT also announced it was selling its Spanish managed ICT services business, including its domestic network infrastructure, to funds managed by Portobello Capital.

While it is a perfectly sensible strategy to focus on high-margin networking, security and cloud services for multinationals as opposed to diluting profits too severely with a focus on smaller operations, this is a restructure which has perhaps been in the works for some time. Let’s not forget, the Global business unit is the rebranding for Global Services, a considerable headache from 2016.

The accounting scandal in Italy forced BT to look at the Global Services business unit operationally, and this could perhaps be traced as the root cause of the restructure which is underway today. The pensions deficit of 2017 is another financial hole to fill, perhaps adding to the wave of disposals which have been initiated over the last few months.

It is important to note that in each of these markets BT will retain a presence. This is not a complete closure of business in France, Latin America or Spain, but simply a realignment of priorities to focus on customers which offer more attractive profit margins.

On the financial side of this business unit, performance does seem to be stabilising. During the last earnings call, CEO Philip Jansen said revenues had dipped by 10% to $1.1 billion thanks to legacy portfolio declines, though the order book was up 21% to $4 billion on a 12-month rolling basis, the highest level for over two years, thanks to the new focus on multinationals.