BT last week announced strategy update to drive leadership in converged connectivity and services to deliver sustainable growth in value.
The UK Operator will be focusing on delivering differentiated customer experiences, investing in integrated network leadership, and transforming BT’s operating model.
Actions being taken include:
- Launching new converged product offerings to deliver differentiated customer experiences, support customer loyalty and improve economic returns;
- Further improving customer experience by increasing FTTP and mobile infrastructure investment within an annual capex allocation of around £3.7bn;
- Transforming BT’s operating model and driving productivity improvements in core UK operations;
- Accelerating the restructuring and transformation of Global Services by introducing new digital products with a greater focus on our top global customers, reducing capital intensity, and significantly lowering costs;
- Focusing on around 30 modern, strategic sites to create a more collaborative, open and customer focused working culture, including plans to exit BT’s headquarters in Central London;
- A three year reduction of c.13,000 mainly back office and middle management roles;
- A year 3 cash cost reduction of £1.5 billion with costs to achieve of £800 million and 2 year payback;
- Cost reductions to help offset near term cost and revenue pressures, provide capacity to invest in value enhancing projects and drive longer term profit growth;
- Hiring c.6,000 new employees to support network deployment and customer service.
Delivering differentiated customer experiences
Putting the customer at the centre of everything BT does will enable differentiation through converged products and service quality and a focus on customer retention. The launch of new converged product offerings will support customer retention, increase loyalty, and improve economic returns.
For example, in the Consumer business, BT will launch converged fixed and mobile products, and make better use of customer data and digital channels for more targeted and personalised marketing complemented by our nationwide retail footprint enabling a local, and personal, service.
Investing in integrated network leadership
To deliver differentiated customer experiences, BT will continue to invest in integrated network leadership. The company aims to have a single integrated all-IP fibre network that enables seamless converged access across fixed, WiFi, and mobile, whilst maintaining capital expenditure discipline within an annual allocation of around £3.7 billion over the next two years.
In fixed, Openreach is taking a ‘Fibre First’ approach that positions the business to deliver, economically, at scale and pace, 10 million fibre-to-the-premises, FTTP, by the mid-2020’s, while in mobile, BT will continue to build 4G to 95% geographic coverage by 2020 and intends to lead the market in 5G.
Transforming BT’s operating model
The next phase of BT’s transformation coincides with changes in the telecoms market with exponential growth in data consumption and network capacity requirements and increasing competitive intensity from established companies and new entrants. At the same time, recent regulatory outcomes have meant that the return on capital in Openreach is moving closer to its allowed return, and a new round of investment has started across fixed and mobile infrastructure.