
BT Centre, BT's headquarters
BT Group plc (formerly
British
Telecommunications plc, abbreviated to
British
Telecom, and still occasionally referred to as such) is
the
privatised former state
telecommunications operator in the United
Kingdom. It is the dominant fixed line
telecommunications and
broadband Internet
provider in the UK, and also operates in more than 170 countries
around the world.
It is headquartered in the BT Centre in the
City of
London
.
BT Group is also one of the largest communication companies in the
world, with over a third of its revenue now coming from its Global
Services division. A
public
limited company, the Group is listed on the
London Stock Exchange and is a
constituent of the
FTSE 100 Index.
History
Early years

Prior to the formation of British
Telecom, telecommunications were handled by the General Post
Office
.png/150px-BT_(old_T).png)
British Telecom "T" symbol,
1980–1991
_logo.png/150px-BT_(old)_logo.png)
British Telecom logotype,
1980–1991

BT "piper" logo, 1991–2003.
This logo can still be seen on some public telephone boxes in
the UK

BT "Connected World" logo,
2003–present
A number of privately owned
telegraph
companies operated in Britain from 1846 onwards. Among them were
- The Electric Telegraph
Company,
- British and Irish Magnetic Telegraph Company,
- British Telegraph Company,
- London District Telegraph Company,
- and the United Kingdom Telegraph Company
The
Telegraph Act 1868 passed the
control of all these to the newly formed GPO (
General Post Office)'s
"Postal Telegraphs Department"
With the invention of the
telephone by
Alexander Graham Bell in 1876
the GPO began to provide telephone services from some of its
telegraph exchanges. However in 1882 the
Postmaster-General, Henry
Fawcett started to issue licences to operate a telephone service to
private businesses and the telephone system grew under the GPO in
some areas and private ownership in others. The GPO's main
competitor the
National
Telephone Company emerged in this market by absorbing other
private telephone companies, prior to its absorption into the GPO
in 1912.
The trunk network was unified under GPO control in 1896 and the
local distribution network in 1912. A few municipally-owned
services remained outside of GPO control.
These were Kingston upon
Hull
, Portsmouth
and Guernsey
. Hull
still retains an independent operator,
Kingston Communications, though it
is no longer municipally controlled.
In 1969 the GPO, a government department, became the
Post Office, a nationalised industry separate
from government.
Post
Office Telecommunications was one of the divisions.
Formation of British Telecom
The
British Telecom brand was
introduced in 1980. On 1 October 1981, this became the official
name of
Post Office
Telecommunications, which became a state-owned corporation
independent of the Post Office. In 1982 BT's monopoly on
telecommunications was broken, with the granting of a licence to
Mercury Communications.
Privatisation
The privatisation took place in 1984, with the sale of 50.2% of the
shares in the company (incorporated in 1984 as
British
Telecommunications plc) to the public in November.
The company changed its trading name to "BT" on 2 April 1991. The
remaining state holdings in the company were sold in 1991 and 1993.
In 1996
Peter Bonfield was appointed
CEO and Chairman of the Executive Committee, promising a
"rollercoaster ride".
On 18 June 1992 BT registered its domain name BT.com — today it is
one of the few companies to own a two letter domain name.
In the 1990s, BT entered the Irish
telecommunications market through a joint
venture with the
Electricity
Supply Board, the Irish state owned power provider. This
venture, entitled
Ocean, found its main success
through the launch of Ireland's first subscription-free dial-up
ISP, oceanfree.net. As a telecoms company it found much less
success, mainly targeting corporate customers. BT acquired 100% of
this venture in 1999.
BT’s attempted global alliances
MCI
In June 1994 BT and
MCI
Communications launched
Concert Communications
Services which was a $1 billion joint venture between the two
companies. Its aim was to build a network which would provide easy
global connectivity to multinational corporations.
This alliance progressed further on 3 November 1996 when the two
companies announcement that they had entered into a full merger
agreement to create a global telecommunications company to be
called Concert plc, which would be incorporated in the UK with
headquarters in both London and Washington DC. This would have
given BT an entry into the US market and MCI a global reach.
The merger
proposition gained approval from the European Commission
, the US Department of Justice
and the US Federal Communications
Commission and looked set to proceed.
However, in light of pressure from investors reacting to the slide
in BT's share price on the
London
Stock Exchange, BT reduced its bid price for MCI, releasing MCI
from its exclusivity clause and allowing it to speak to other
interested parties. On 1 October 1997,
Worldcom made a rival bid for MCI which was
followed by a counter-bid from
GTE. Because
Worldcom used its stock to leverage its purchase, as opposed to
cash (used by BT), it was able to outbid BT. MCI accepted the
Worldcom bid and BT pulled out of its deal with a generous
severance fee of $465 million.
BT made even more money when it sold its stake in MCI to Worldcom
in 1998 for £4,159 million on which it made an exceptional pre-tax
profit of £1,133 million. As part of the deal, BT also bought out
from MCI its 24.9% interest in Concert Communications, thereby
making Concert a wholly-owned part of BT.
The reaction to the failure of the deal in the City of London was
critical to the future of then Chairman
Iain Vallance and CEO
Peter Bonfield, and the lack of confidence
from the failed merger would ultimately lead to their
removal.
AT&T
As BT now owned Concert, and still wanted access to the North
American market, it needed a new partner. An
AT&T/BT option had been mooted in the past, but
stopped on regulatory grounds due to their individual virtual
monopolies in their home markets. By 1996, this had receded to the
point where a deal was possible. However, the former monopolies
clashed in management and culture – and the alliance never really
worked from the start. Also, during the proposed MCI merger
position, BT/MCI had placed a series of nominated customers inside
Concert to overcome regulatory issues, leaving Concert with a sales
force. On merger with AT&T, it was reversion to delivery of a
series of Global products, and two competing owners – which robbed
Concert of revenues and left its management disillusioned.
At its height, the Concert managed network directly reached more
than 800 cities in 52 countries, and interlinked to about 240 other
networks to extend access to 1,300 cities in 130 countries.
Although Concert continued signing customers, its rate of revenue
growth slowed, so that in 1999 David Dorman was made CEO with a
brief to revive it.
In late 2000 the BT and AT&T boards fell-out – partly due to
each partner's excess debt, and the resulting board room clear-outs
– partly due to Concert's $800 million annual losses. AT&T
recognized that Concert was a threat to its ambitions if left
intact, and so negotiated a deal where Concert was split in two in
2001: North America and Eastern Asia went to AT&T, the rest of
the world and $400M to BT. BT's remaining Concert assets were
merged into its BT Ignite, later BT Global Services group .
BT Ireland
In 2000, BT acquired
Esat Telecom Group
plc, and all its subsidiary companies, and
Ireland On Line.
It also purchased
Telenor
's minority shareholding in Esat Digifone. The Esat Telecom Group was
split in two with the landline and internet operations were
combining with Ocean to became part of BT Ignite. Esat Group was
renamed Esat BT in July 2002, and eventually
BT Ireland in April 2005. Esat Digifone became
part of BT Wireless, before being spun off into a separate
independent company
mmo2 plc
(now
Telefónica Europe).
EsatBT
installed the first DSL
lines in Ireland, to try and compete heavily with former state
telecoms company Eircom and operate one
exchange, in Limerick
. It
is also the second largest fixed line telecommunications company in
Ireland behind the former monopoly operator,
Eircom.
2001 debt crisis
By 2001, BT had a debt of £30 billion, much of which was acquired
during the bidding round for the
3rd generation
mobile telephony (commonly known as 3G) licences. It had also
failed in its series of proposed global mergers, and the funds
flowing from its then virtual monopoly of the UK market place had
been largely removed. It was also headed by two executives who had
little support from the
London
Stock Exchange, particularly in light of a 60% drop in share
price in sixteen months.
The first manoeuvre was to create confidence in the management
team.
Philip Hampton joined as CFO,
and in April 2001 Sir Iain Vallance was replaced as Chairman by
recognised turn around expert
Sir
Christopher Bland. The company then began to sell off or sell
and lease back a large part of its assets.
Europe’s largest rights issue
In May 2001 BT carried out corporate Europe’s largest ever
rights issue, allowing it to raise £5.9
billion. A few days before, it also sold stakes in
Japan Telecom, in mobile operator J-Phone
Communications, and in
Airtel of India to
Vodafone.
Sale of Yell Group, and the demerger of O2
In June 2001 BT's directory business was sold as
Yell Group to a combination of
private equity firms
Apax Partners and
Hicks, Muse, Tate & Furst
for £2.1 billion.
A large demerger followed in November 2001, when the former mobile
telecommunications business of BT, BT Cellnet, was hived off as a
separate business named "
mmO2". This included
BT owned or operated networks in other countries, including BT
Cellnet (UK), Esat Digifone (Ireland), and Viag Interkom (Germany).
All networks now owned or operated by mmO2 (except
Manx Telecom) were renamed as O2. The de-merger
was accomplished via a share-swap, all British Telecommunications
plc shareholders received one mmO2 plc and one BT Group plc (of
which British Telecommunications is now a wholly owned subsidiary)
share for each share they owned. British Telecommunications plc was
de-listed on 16 November, and the two new companies started trading
on 19 November.
Aftermath
At the end of the series of sales, in October 2001 Sir Peter
Bonfield resigned, and was replaced by former
Lucent CEO
Ben
Verwaayen.
Having promised a "rollercoaster ride", during Bonfield's tenure
the share price went from £4 to £15, and back again to £5.
Bonfield's salary to 31 March 2001, was a basic of £780,000
(increasing to £820,000) plus a £481,000 bonus and £50,000 of other
benefits including pension. He also received a deferred bonus,
payable in shares three years' later, of £481,000, and additional
bonuses of £3.3 million.
Andreas
Whittam Smith writing in
The
Independent newspaper called Bonfield, Chairman Vallance and
Deputy Chairman
Lord
King "The men who broke the bank at British Telecom".
mmO2 plc was replaced by
O2 plc in a further
share-swap in 2005, and subsequently bought in an agreed takeover
by
Telefónica for £18 billion and
delisted.
BT's recent developments
In
February 2005, BT acquired El Segundo, California
-based telecoms giant Infonet (now re-branded BT
Infonet), giving BT access to new geographies. In April
2005, it bought Radianz (now rebranded as
BT
Radianz), which expanded BT's coverage, provided BT with more
buying power in certain countries and importantly gave access to
the financial markets.
Openreach
was announced in September 2005 at the instigation of Ofcom
to provide
an open and equal service of provision and repair in the "last
mile" of copper wire. This business was formed from 25,000
engineers previously employed by BT's Retail and Wholesale
divisions. It is designed to ensure that other communications
providers (CPs) have exactly the same operational conditions as
parts of the BT group. It opened for business on 11 January
2006.
In August 2006 BT acquired online electrical retailer
Dabs.com for £30.6 million. The
BT Home Hub was also launched in June
2006.
In October 2006 BT confirmed that it would be investing 75% of its
total capital spending, put at £10 billion over five years, in its
new
Internet Protocol (IP) based
21st century network (21CN). Annual savings
of £1 billion per annum are expected when the transition to the new
network is complete in 2010, with over 50% of its customers
transferred by 2008.
That month BT took a major step forward when
the actual process that will be used to transfer the first
customers on to 21CN was successfully tested at Adastral Park
in Suffolk.
In January
2007, BT acquired Sheffield based ISP, PlusNet
plc, adding
an additional 200,000 customers. BT stated that PlusNet will
continue to operate separately out of its Sheffield
head-office.
On 1 February 2007 BT announced it had agreed terms to acquire
International Network Services Inc. (“INS”), a leading global
provider of IT consulting and software solutions. This professional
services acquisition will increase BT's presence in North America
and will significantly enhance BT's consulting capabilities.
On 20 February 2007 BT announced that Sir Michael Rake, then
chairman of accountancy firm
KPMG
International, would succeed Sir Christopher Bland, who stepped
down in September of that year.
On 20 April 2007 BT announced the acquisition of
Comsat International which provides network services
to the South American corporate market.
BT acquired Wire One Communications in June 2008 and folded the
company into BT Conferencing, its existing conferencing unit, as a
new video business unit/ref. BT Conferencing is now the global
leader in video conferencing services and solutions.
On 28 July 2008, BT announced the acquisition of
Ribbit, of Mountain
View, California, "Silicon Valley's First Phone Company." Ribbit
provides Adobe
Flash/
Flex APIs, allowing web developers to incorporate
telephony features into their
Software as a Service (SaaS)
applications.
On 14 May 2009 BT said it was cutting up to 15,000 jobs in the
coming year after it announced its results for the year to 31 March
2009.
In July 2009 it was announced that BT had offered workers a long
holiday for an up front sum of 25% of their annual wage or a
one-off payment of £1000 if they agree to go part time.
Operations
British Telecommunications plc (BT) is a wholly-owned subsidiary of
BT Group plc and encompasses virtually all businesses and assets of
the BT Group. BT Group plc is listed on stock exchanges in London
and New York.
BT runs the
telephone exchanges,
trunk network and
local loop connections
for the vast majority of British fixed-line telephones. Currently
BT is responsible for approximately 28 million telephone lines in
the UK. Apart from
Kingston
Communications, which serves Kingston-upon-Hull, BT is the only
UK telecoms operator to have a
Universal Service Obligation (USO)
which means it must provide a fixed telephone line to any address
in the UK. It is also obliged to provide public call boxes.
BT's
businesses are operated under special government regulation by the
British telecoms regulator Ofcom
(formerly
Oftel). BT has been found to have
Significant Market Power in some markets following Market Reviews
by Ofcom. In these markets, BT is required to comply with
additional obligations such as meeting reasonable requests to
supply services and not to discriminate.
As well as continuing to provide service in those traditional areas
in which BT has an obligation to provide services or is closely
regulated, BT has expanded into more profitable products and
services where there is less regulation. These are principally,
broadband internet service and
bespoke solutions in telecommunications and
information technology.
BT Group is organised into the following business divisions:
- BT Retail: Retail
telecoms services to consumers
- BT Wholesale:
Wholesale telecoms core trunk network
- Openreach: fenced-off
wholesale division, tasked with ensuring that all rival operators
have equality of access to BT's own local network
- BT Global
Services: Business services and solutions (formerly
BT Ignite and BT Syntegra)
- BT Exact / One IT: used to handle consultancy
and internal IT. Now been replaced by BT Design.
- Group operations: handles security, research and development, and other functions
for BT Group Plc such as legal services
From 1 July 2007 two additional divisions were put in place:-
- BT Operate took responsibility from BT
Wholesale for the roll-out and maintenance of the group's new IP
based fixed-line network, known as 21st Century
Network (21C).
- BT Design pulled together IT designers from BT
Retail, BT Wholesale, BT Global Services and OneIT to design
services on the 21C network.
Financial performance
Year ended |
Turnover (£m) |
Profit/(loss) before tax (£m) |
Net profit/(loss) (£m) |
Basic eps (p) |
31 March 2009 |
21,390 |
(134) |
(81) |
3.2 |
31 March 2008 |
20,704 |
1,976 |
1,738 |
21.5 |
31 March 2007 |
20,223 |
2,484 |
2,852 |
34.4 |
31 March 2006 |
19,514 |
2,633 |
1,644 |
19.5 |
31 March 2005 |
18,429 |
2,693 |
1,539 |
18.1 |
31 March 2004 |
18,519 |
1,945 |
1,414 |
16.4 |
31 March 2003 |
18,727 |
3,157 |
2,702 |
31.4 |
31 March 2002 |
18,447 |
1,461 |
1,008 |
12.1 |
31 March 2001 |
17,141 |
(1,031) |
(1,875) |
(25.8) |
31 March 2000 |
18,715 |
2,942 |
2,055 |
31.7 |
31 March 1999 |
16,953 |
4,295 |
2,983 |
46.3 |
31 March 1998 |
15,640 |
3,214 |
1,702 |
26.6 |
31 March 1997 |
14,935 |
3,203 |
2,077 |
32.8 |
31 March 1996 |
14,446 |
3,019 |
1,986 |
31.6 |
31 March 1995 |
13,893 |
2,662 |
1,731 |
27.8 |
31 March 1994 |
13,675 |
2,756 |
1,767 |
28.5 |
31 March 1993 |
13,242 |
1,972 |
1,220 |
19.8 |
31 March 1992 |
13,337 |
3,073 |
2,044 |
33.2 |
Analysis of figures
After a pay rise of over 40%, BT's chief financial officer, Hanif
Lalani, became one of the very few UK financial directors whose
annual remuneration exceeds £1 million. He became CEO of BT Global
Services in October 2008 and was replaced as BT Group CFO by Tony
Chanmugam on 1 December 2008.
In recent years, the strategy of BT plc has been to reduce its
dependence on traditional voice revenues and instead obtain an
increasing portion of its turnover from so-called
New Wave
revenues. At the heart of this strategy is BT Global Services,
which has won many significant contracts in the commercial and
public sectors, in part through its portrayal as a "momentum
story".
There is, however, increasing disquiet among analysts that the
annual growth of the Global Services business has been
unimpressive, and that BT has been using prior year adjustments to
achieve favourable growth figures.
Take the quarter ended 30 September 2005, for example. At the time,
BT said the external revenues of its Global Services division were
£1,740m. However, a year later, BT revised this figure downwards to
£1,703m. This enabled BT to claim growth of 3.5%, instead of the
dismal 1.3% it would have been forced to announce if it hadn't
adjusted the prior year's figures.
BT has made a habit of adjusting the previous year's revenue figure
every quarter. Only once in the past year has BT adjusted the
figure upwards rather than downwards.
Sources
- Financial Director
- Google spreadsheet based on BT's quarterly
financial reports
- Reuters financial data for BT for 2009
Environment
In 2004, the BT Group signed the world's largest renewable energy
deal with
npower and British Gas, and
now all of their exchanges, satellite networks and offices are
powered by renewable energy. BT is a member of the Corporate
Leaders Group on Climate Change. They signed a letter urging the
government to do more to tackle this problem. Janet Blake, head of
global corporate social responsibility (CSR) at BT, says that she
would like to see incentives that find ways of rewarding those
companies that focus on climate change by making investments in
green business models.
BT has made it clear that it has an ambitious plan to reduce carbon
dioxide emissions. Its strategy includes steps to reduce the
customer's, supplier's, employee's, and its own footprints. BT has
actually pledged to achieve an 80% reduction by the year 2016,
which will require further efficiency improvements.
Market position and power
In 1984 the
Telecommunications
Act set the framework for a competitive market for telecoms
services by abolishing BT's exclusive right to provide services. In
the early 1990s the market was opened up and a number of new
national Public Telecommunications Operators (PTOs) were given
licences. This ended the duopoly that had existed in the 1980s when
only BT and Mercury were licensed to provide fixed line telecom
networks in the UK.
Recent and future plans
- BT's 21st Century Network is a network
transformation project which will see the UK's telephone network
move from the present AXE 10/System
X Public Switched Telephone Network (PSTN) to an IP/MPLS system. BT
envisages annual savings of £1 billion when the transition to the
new network is complete. Capital expenditure is put at £10
billion.
- In April 2007, BT launched a new online service called BT Tradespace.
According to BT the new service is a "social media platform
dedicated to small businesses."
- In December 2006, BT launched BT
Vision, a broadband Television service with the ability to
watch programmes from previous weeks or months. According to
BT PLC
Today, companies including BBC Worldwide, Paramount, Warner
Music Group, Cartoon Network and the National Geographic Channel,
have already signed deals with BT Vision. Microsoft announced on 9
January 2008 that BT Vision services will shortly be made available
on the Xbox 360.
- In May 2008, BT launched BT Total Broadband Anywhere, an
all-inclusive package which offers a free, internet-capable
smartphone – the BT ToGo and BT’s Total Broadband service in the
home.
BT's "Web patent"
In 2001 BT discovered it owned a
patent ( )
which it believed gave it patent rights on the use of
hyperlink technology on the
World Wide Web. The corresponding UK patent
had already expired, but the US patent was valid until 2006.
Opponents of BT's claim held that the patent had never been valid,
due to prior art by both
Douglas
Engelbart and
Ted Nelson's
Project Xanadu. Nevertheless on 11 February
2002, BT began a court case relating to its claims in a U.S.
federal court against the
Internet service provider Prodigy Communications Corporation. The U.S.
court ruled on 22 August 2002 that the BT patent was not applicable
to Web technology, and granted Prodigy's request for summary
judgement. The issue of prior art was thus not addressed.
Controversy
Behavioural targeting
In early 2008 it was announced that BT had entered into a contract
(along with
Virgin Media and
Talk Talk) with the
spyware company
Phorm
(responsible under their 121Media guise for the Apropos
rootkit) to intercept and analyse their users'
click-stream data and sell the anonymised aggregate information as
part of Phorm's OIX advertising service. The practice, known as
"
behavioural targeting" and
condemned by critics as "
data pimping",
came under intense fire from various internet communities and other
interested-parties who believe that the interception of data
without the consent of users and web site owners is illegal under
UK law (RIPA). At a more fundamental level, many have argued that
the ISPs and Phorm have no right to sell a commodity (a user's
data, and the copyright content of web sites) to which they have no
claim of ownership. In response to questions about Phorm and the
interception of data by the Webwise system
Sir Tim Berners-Lee is quoted as
saying:
"It's mine - you can't have it. If you want to use it
for something, then you have to negotiate with me." —Sir Tim
Berners-Lee, 2008
Consumer Advice
In a response to a question from a consumer service, Capital
Letters (
The Guardian), BT said it
doesn't feel it is its responsibility to tell customers when they
can get a service at a cheaper rate.
See also
External links
Data
Other
References
- BT around the world
- " Contact BT." BT Group. Retrieved on 8 September
2009.
- " Boundary Map." City of London. Retrieved on 8 September
2009.
- Summary of BT results for 2008
- BBC News | BUSINESS | Sir Peter Bonfield: A
profile
- List of
Large Corporations that own a Two Letter Domain
- MCI to weigh WorldCom bid as BT merger process
grinds on
- GTE Plans a $25 Billion Cash Bid to Make It a 3-Way
Fight : Battle to Acquire MCI Heats Up - International Herald
Tribune
- MCI and WorldCom - How British Telecom Fell Short at
Competitive Intelligence
- Articles
- BT beats conflict of interest by buying both
sides
- BBC News | BUSINESS | BT attacks debt
mountain
- BBC News | BUSINESS | Vallance resigns from
BT
- BT wraps up share sale
- BT retreats from Japan and Spain
- BT sells Yell for £2.1 billion
- Shareholders give thumbs up to BT wireless
spin-off
- BBC News | BUSINESS | BT chief quits early
- BBC News | BUSINESS | BT lures Lucent boss with £7m
package
- BT's Sir Peter Bonfield stands to gain extra £3.3m
in share bonuses
- Andreas Whittam Smith: The men who broke the bank
at British Telecom
- BBC NEWS | Business | Telefonica bids £18bn for
UK's O2
- BT goes home
- BT's Openreach could have to list
separately
- BT buys on-line retailer Dabs.com
- Thomson ships BT home hub
- BT transfers first customer lines to 21CN
network
- Bt buys PlusNet for CRM system
- BT buys former Lucent division INS
- Datamonitor ComputerWire - BT Appoints New Chairman
to Replace Bland
- BT buys Comsat
- BT buys Wire One
- BT buys Ribbit for $105m
- BT to shed a further 15,000 job losses BBC
News, 14 May 2009
- BBC NEWS
- Interview: CSR delivers £2.2bn for BT - 30 Oct 2006
- IT Week
- Climate change
- Climate change - BT's Vision and Strategy
- BT's 21CN website
- BT's corporate website
- BBC NEWS | Technology | Xbox will host BT's TV
service
- BT’s “Hyperlinking” Patent Litigation
Fails
- F-Secure Spyware Information Pages: Apropos
- F-Secure Spyware Information Pages:
PeopleOnPage
- ISP data deal with former 'spyware' boss triggers
privacy fears
- How Phorm plans to tap your internet connection
- Web users angry at ISPs' spyware tie-up
- Data pimping: surveillance expert raises illegal
wiretap worries
- Net think thank: Phorm is illegal
- The Phorm “Webwise” System - a Legal Analysis
- Web creator rejects net tracking