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Forward-looking statements caution. Certain statements in this presentation are forward-looking and are made in reliance on the safe harbour provisions of the US Private Securities Litigation Reform Act of 1995. These statements include, without limitation, those concerning: revenue, market share
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1. Andy Green
Chief Executive Officer
January 13th 2003
2. Forward-looking statements – caution Certain statements in this presentation are forward-looking and are made in reliance on the safe harbour provisions of the US Private Securities Litigation Reform Act of 1995. These statements include, without limitation, those concerning: revenue, market share, margins, working capital and capital expenditure control, cash management, earnings per share, cash-flow and debt reduction targets; growth opportunities by BT business, including broadband growth in the UK; BT Retail, BT Wholesale and BT Ignite cost control and savings; break-even and cash flow targets for BT Ignite’s loss-making and ex-Concert businesses; revenue targets for BT Ignite’s businesses; broadband growth and customer targets; reductions in costs, and prices for customers, and increased access to broadband.
Although BT Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.
Factors that could cause differences between actual results and those implied by the forward-looking statements include, but are not limited to: material adverse changes in economic conditions in the markets served by BT and its lines of business; future regulatory actions and conditions in BT’s operating areas, including competition from others in communications markets; selection by BT and its lines of business of the appropriate trading and marketing models for its products and services; technological innovations, including the cost of developing new products and the need to increase expenditures for improving the quality of service; the anticipated benefits and advantages of new technologies not being realised; developments in the convergence of technologies; prolonged adverse weather conditions resulting in a material increase in overtime, staff or other costs; the anticipated benefits and advantages of new technologies, products and services, including broadband, not being realised; the timing of entry and profitability of BT and its lines of business in certain communication markets; significant changes in market shares for BT, its lines of business and its principal products and services; fluctuations in foreign currency exchange rates and interest rates; general financial market conditions affecting BT’s performance; factors not within BT’s control which may affect the ability of BT’s lines of business to reduce costs, grow revenue, improve quality and maximise return on capital employed; and the reintegration of Concert.
3. Agenda Who are we?
Our global position
Our performance against strategy
4. Our core focus
5. What is BT Ignite?
6. Our existing strengths
7. Based on a market leading performance
8. BT brand and financial strength Corporate customers need a trusted, long-term business partner
BT is one of the most recognised brands in the marketplace:
In Europe
By corporates
BT brand attributes important to corporates
Trust, reach, stability, security
BT Group on ‘sound’ financial footing
Healthy balance sheet
Cash generating businesses
Flexibility to pursue growth strategies
9. Existing strength in target segment In the UK:
80 of FTSE 100
19 of top 20 UK headquartered financial institutions
And internationally, customer examples include:
10. Major strength in global account and service management Heritage across BT
Single interface support to customers
17 years experience
Concert Global Accounts back in BT Group
Continuous improvement from customer feedback
11. Global Position
12. Global Position - BT in Asia Pacific BT is committed to Asia Pacific. We will:-
Expand the BT regional, post Concert product footprint where it supports our customers
Proactively expand the product portfolio
Provide price competitive products based on market rates
Offer in-region customer support
Challenge regulatory barriers to enhance product propositions and service levels
Continue to focus on Asia Pacific as a key component of BT’s global MNC strategy
13. Global Position - BT in the US – Assets 1,400 professionals on the ground
Comprehensive ICT portfolio with continent-wide coverage
Operate and manage US network infrastructure
Regional customer service center of excellence in Atlanta
Own and operate media centers in Washington, DC and Los Angeles offering a wide range of global broadcast solutions
Sales offices in more than a dozen key US business cities
Boston-based 24-hour operations center for conferencing
On-the-ground in the US since 1988
14. BT in the US – Depth of capabilities Already have 1200 business customers in the Americas
Global sales & service
Customized solutions/outsourcing
Broadcast services
Carrier services
Conferencing
# 1 in the UK; rapid growth in the US
Consultancy/systems integration (Syntegra)
Specialist Financial/Banking applications, trading floors
BTexact
R&D relationship with MIT Labs
US venturing operation on the West Coast
15. How are we delivering against strategy?
16. BT in Europe - Built on a deep and broad retail network
18. European Path to Profitability Spain and Ireland already reached EBITDA breakeven
All other countries currently on target for end of March 2003
19. Standard Operating Environment The Proposition
To Create Cost Competitiveness with Consistency requires a Common Portfolio Supported by Common Processes and Systems.
20. Standard Operating Environment - Areas of Focus Product Harmonisation
Reduced size of portfolio
Consistent portfolio across BT Ignite
Minimise local products
Common management processes
Sales
Upskilling
Underpinned by Common Process Tools and Systems
Single approach to management and targeting
Customer Service
Defined Portfolio of service products available everywhere
Global Processes and Systems to deliver service excellence
Consolidated Service Centres
21. Standard Operating Environment - Areas of Focus Network Automation
Centralised management
Automated Delivery of Bandwidth; Frame and IP/MPLS
Centralised Billing
Rationalised Billing Operations
Common Processes and Systems (52 systems today)
Enhanced Billing Capability (single bills, currencies etc)
Running the Business
Integrated Processes for HR, Finance
Simplified Commercial Models and Decision Making
Common internal infrastructure
22. Standard Operating Environment in Action Recent Examples
Network Control Centre opened in Brussels centralises network management across 16 countries
Web based access pricing tool across all major markets speeds up revised bid process
Common customer contracts to be launched 1st February
Single HR system across BT Ignite available by March as first phase of wider systems consolidation programme (sales, service, billing etc)
Single functional leadership of Customer Service implemented
Process rationalisation work underway
First phase of data consolidation underway
23. Realising the benefits of Concert Integration Physical network infrastructure split and network operation centres hand-over completed
2361 employees transferred to BT Group entities
Customer accounts successfully split between parents and ongoing commercial contracts transferred
Ł140m annualised synergies on track to be achieved by December 2003
Total synergies likely to exceed Ł140m target
24. Next generation IP products Some examples:
Global MPLS - based IP VPNs
Gigabit Ethernet
Wireless LAN
Transform
Data Storage
25. BT’s MPLS Services - The Brief History BT has been working with Cisco on MPLS since 1997
BT launched world’s first QoS MPLS offer at Telecom ‘99
First BT customers were brought into service in mid 2000.
BT has invested Ł45M to date in design and systems
Constructed a testbed at Adastral Park that is larger than many production networks
26. BT’s MPLS Services - Current Facts We manage about 17,000 MPLS ports, in about 800 VPNs
Most are in the UK - we have about 2000 non-UK ports
Adding 1,000 ports per month in UK, 200 per month RoW
Recently received orders for a 6,000 site deal in the UK, a 1,000 site deal in NL, and 500 site deal in Germany
Domestic MPLS services now available in UK, Nordics, Germany, Ireland, Netherlands, Belgium and Spain
60 countries of seamless global reach
27. Why MPLS? Why BT? Why Now? MPLS VPNs are forward looking and mix the flexibility of IP with the security and stability of services like ATM
They make management of VPNs more simple in many ways - moves, changes, scaling, application mix
Of course, price points are more keen than Layer 2 services
New customers choose us primarily because of our experience, credibility, stability and breadth of vision
Existing customers like our “Technology Refresh” vision that Transforms them seamlessly from layer 2 to Agile IP
28. Global Proposition Global Proposition: Ignite & Concert networks aligned, integrated Global MPLS product
other Ignite product harmonisation underway Germany, NL, Spain target completion all european countries April 2003
Extensive Global IPVPN Footprint
Connectivity in 60+ countries from 500+ PoPs
400+ cities/towns in Europe (inc UK), 130 cities outside Europe
MPLS connections growing at +6% month on month (5.6% UK,12.5% outside UK)
EVUA report in November recommends BT: IP VPN BT price at competitive level with Infonet and Equant
Global Products like for like revenue growth 10% year on year
29. Track record in UK
Łm Q2 02/03
Revenue 475
EBITDA 45
Strength across industry sectors
Expansion of solutions capability in Europe core to BT Ignite’s strategy Leading supplier of solutions
30. Accelerating solutions growth
31. Unilever - Key Facts Contract signed 4 November 2002 - one of the largest ever outsourcing contracts in UK corporate history
Worth 1 billion Euros over 7 years to manage and develop the company's entire global communications infrastructure
Unilever appointed BT as their exclusive network provider for 5 years and preferred supplier for a further 2 years
BT will acquire 20 million Euros of assets, up to 250 people and all the existing supplier contracts (circa 200)
BT will provide Unilever with all voice, data and mobile communications in 90 countries
34. We are driving ICT growth in the UK with BT Retail
35. BT ICT Strategy in the UK A Ł38bn market
Growing at 6%
Highly fragmented
BT market leader at 11%
Twice the size of IBM overall, bigger even if connectivity and transport excluded
Network and voice skills becoming more important:
- Blurring of LAN/WAN boundaries
- Voice and data convergence
- Networked storage
- Migration to IP
36. BT ICT strategy in Western Europe Ł76bn market growing at c10% CAGR
Top Level Business Plan
Grow BT market share faster than market CAGR
Primary focus on IP Infrastructure, Outsourcing and Applications Management
Build strong customer base (e.g, €1bn Unilever contract)
Enablers
Leverage BT assets and strengths
Build on existing European businesses
Extend and build partnerships
Leverage pan-European IP network
37. Syntegra provides systems integration and consulting services
38. Driving down customer dissatisfaction
39. BT’s investment in customer service Increased resources on areas that surround the customer
Global network of service and network management
Service and reliability backed by competitive SLAs, SLGs which reflect the customer’s experience
access included, where supplied by BT; site-level measurement
Flexible global billing services in multiple currencies, accounting options and management reports
State-of-the-art e-Business tools
40. BT investment in customer service Global reach, local touch
Single point of contact for account management and customer service worldwide – with access to global resources
Global ownership & co-ordination of order, repair, reporting and support
Multilingual support
20 years managing customers’ global networks.
Extensive experience working with large organizations to deliver value-added services and custom solutions.
41. Motivating our people Leadership and change
‘One company in many countries’ organisation
Key appointments at senior level across Europe
Rebalancing and rightsizing
Organisational realignment
Integration of Concert people
Inspiring our people
Performance orientation
Growing the skills base
Diversity mix
Culture - ‘Inspire’ programme
42. Summary Leader in Solutions for Multi-Site Corporates
European focus; global reach through partnership
Rigorous financial discipline
Challenging but achievable targets
and …
43. One brand everywhere
44. Q&A