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BT squeezed between the rock of awful results and the hard place of more fibre investment

gavinpatterson

via Flickr © Chatham House, London (CC BY 2.0)

  • BT almost simultaneously firing and hiring
  • Going to take fibre to three million homes by 2020
  • Winning Premier League football rights not crucial

BT finds itself in a nasty squeeze. Vociferous demands from regulators, users and politicians to speed up its deployment of real fibre broadband delivering gigabit speeds (and not just fibre to the curb and copper into the dwelling or office) thunder in on the one hand, while poor financial results sour investor confidence on the other.

In trying to find a way through BT finds itself almost simultaneously firing and hiring. Last year heavy losses meant it had to undertake some serious restructuring, so mostly middle management and so-called back office staff were thinned to the tune of 4000  worldwide. But today it’s gone onto the front foot by announcing that its Openreach subsidiary has plans to create 3,000 engineering jobs this year to speed up its fibre to the home (FTTH) broadband rollout.

This will result in an acceleration of that effort so that Openreach can pass (or reach, as BT prefers to call it) three million homes by 2020, up from the two million it was previously forecasting.

If nothing else, that minor uptick in the rate of the rollout, even with the addition of 3000 extras, indicates just how costly and time consuming a fibre dig to the home actually is and  why so many telcos go to great lengths to avoid picking up a shovel when there is no guarantee that consumer uptake will make the whole exercise worthwhile. You can ’reach’ customers with your fibre but getting them to fork out for service in large numbers is a different story - no matter what they say in advance.

BT Openreach says it’s targeting Birmingham, Bristol, Cardiff, Edinburgh, Leeds, Liverpool, London and Manchester as a first phase with the long term aim of  connecting up to 40 British towns and cities over the next decade.

Meanwhile, the other side of the BT conundrum made itself felt today with the publication of the company’s quarterly results.

BT has reported a 3 per cent  fall in revenue, but a 25 per cent  increase in pre-tax profits to try and make up for it. Investors weren’t fooled though (it’s the underlying revenue numbers which are most important) and BT’s share price duly hit a five year low, spurred downwards by more bad news on customer numbers. On the BT TV side it actually lost 5000 customers (when it should still be putting them on) its worst quarterly TV performance yet, while its broadband subscriber adds also slowed, down to 35,000 from 83,000 in the last quarter of 2016.

When quizzed on BT’s TV performance, CEO Gavin Patterson is reported to have indicated that Premier League football rights were not the be-all and end-all for BT’s apparently failing sports channel, despite those missing 5000 customers. He wouldn’t be bidding beyond what he knew they were worth, he told reporters.

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