Plans for Next Wave of Communications Revolution
British Telecommunications PLC
13 April 2000
BT REVEALS PLANS TO LEAD THE NEXT WAVE
OF THE COMMUNICATIONS REVOLUTION
Innovative restructuring to position BT ahead of the next
wave in communications
* Radical separation of UK fixed business into wholesale and
retail, facilitating more focused management and greater
clarity in regulation
* Creation of four new high growth businesses operating
both in the UK and internationally
* Ignite - a data-centric broadband IP business
focused on corporate and wholesale markets
* BTopenworld - a mass market Internet business
focused increasingly on broadband services
* BT Wireless - an international mobile business
emphasising mobile data and next generation services
* Yell - an international directories and e-commerce
business
* More aggressive European expansion strategy
* c. £4 billion planned spend over three years on
European backbone, web hosting and broadband expansion
* Commitment to increase equity investment: Telfort
increased to 100 per cent today
Significant benefits for Concert, BT's global venture with
AT&T
New structure designed to facilitate separate listings
* Intention to list Yell by year end
----------------------------------
BT today announced a radical restructuring that will enable it
to become the world leader in the next wave of the
communications revolution. The restructuring follows a
comprehensive strategic review of the changes in technology,
market structure, customer needs and regulatory approaches
which are driving the industry.
The objective of the restructuring is to position BT
ahead of the forthcoming changes in the marketplace, with a
sound balance between management focus, the ability to capture
cross-business synergies and the flexibility to meet future
needs.
The result will be a structure, unique amongst
communications companies:
* The UK fixed network business will be separated into
wholesale and retail divisions. This will have two main
advantages. First, regulation of BT in the UK will have
greater clarity and should be concentrated primarily on
the wholesale business. Second, management will be
better able to focus on the different tasks of achieving
continued growth in the two, distinct marketplaces.
* BT's other assets in the UK, Europe and elsewhere will be
re-grouped by market sector rather than geography. There
will be four new high growth-oriented businesses: Ignite,
a data-centric broadband IP business focused on corporate
and wholesale markets; BTopenworld - a mass market
Internet business focused increasingly on broadband
services; BT Wireless - an international mobile business
emphasising mobile data and next generation services; and
Yell, formerly known as Yellow Pages - an international
directories and e-commerce business which BT intends to
list by year end.
BT has already created substantial value beyond its core
UK activities. In continental Europe, it has interests in
mobile and fixed line operations encompassing more than 80 per
cent of western Europe's population and virtually all major
business centres - on an investment of less than £6 billion.
In the Asia Pacific region, BT is also a clear leader having
invested approximately £2 billion to create a geographic
platform which includes Japan, Hong Kong, Singapore, Malaysia,
Korea, Australia, New Zealand and India. When combined with
Concert, a global platform has been assembled which is
superior to any of BT's rivals. The restructuring announced
today enhances, expands and builds on these assets and
prepares BT for the new age of communications. Specifically,
it:
* creates, through Ignite, Europe's leading broadband IP
services provider to the corporate and wholesale market.
Ignite builds upon BT's existing European portfolio of
controlled assets and joint venture partners,
strengthening BT's existing European operations with
seamless leading edge networks, data products and
solutions capabilities. It also builds value in Concert
through increased distribution and the expansion of in-
country networks and hosting capabilities.
* integrates, through BTopenworld, BT's many successful
ISPs and portals (including Genie, Europe's leading
mobile portal) in a single, international, mass-market
business.
* consolidates BT's mobile operations under BT Wireless,
which is responsible for exploiting opportunities in
mobile, mobile data and mobile broadband, while
extracting the synergies between the elements of BT's
global mobile portfolio, including the Advance alliance
with AT&T.
* promotes BT's strategy of buying up in its existing
ventures where possible. Consistent with this strategy,
BT also announced today that it has acquired full control
of Telfort, its fixed and mobile operation in the
Netherlands, by buying the remaining 50 per cent for £1.2
billion. (See separate news release).
An immediate advantage of the restructuring is that, in
identifying the separate businesses within BT, shareholders
and analysts will be able to gain a greater understanding of
their intrinsic value and potential. This, in turn, will
facilitate separate listings for some of BT's businesses,
either individually or in combination.
Sir Peter Bonfield, BT's chief executive, said: 'BT has
already invested for the new age in communications - in its UK
network, in its unparalleled spread of European and Asia
Pacific investments, and in its Concert global venture with
AT&T.
'This restructuring will strengthen our position in the
key growth areas of broadband, consumer Internet and mobile
and will help us to realise our aggressive plans to lead the
next wave of the communications revolution.
'It will lead to even greater strategic flexibility,
tighten our operational focus, provide our employees with a
wealth of opportunities, increase management accountability
and enhance transparency for investors.'
David Dorman, chief executive officer of Concert, said:
'This is an exciting announcement from BT. It will provide us
with deeper in-country reach via BT and its partners, and even
stronger European distribution, allowing us to further improve
our offer to multinational customers.'
Professor Dr. Wilhelm Simson, chairman of Viag AG, said:
'We welcome this move by BT. The additional products and
services which will be available from BT's new business units
will provide Viag Interkom with significantly enhanced market
opportunities.'
C. Michael Armstrong, chairman and chief executive
officer of AT&T, said: 'I am delighted that our partner BT is
moving aggressively to accelerate the expansion of its IP
network in Europe.
'As BT implements its plans, it will be able to put more
potential customers on its own networks. That means AT&T
customers served through Concert will get even faster and
higher quality service.'
Davide Croff, chief executive officer of Banco Nazionale
del Lavoro said: 'This was good news for the future of our
Italian businesses. We look forward to working with BT's new
business units to meet the Italian and European customers'
needs.'
Further quotes from BT's partners around the world are
set out in Annex 6.
The UK fixed businesses
BT today announced a radical separation of its UK fixed
business into wholesale and retail, facilitating more focused
management and greater clarity in regulation. This move
anticipates the continued expansion of a competitive
communications market place and will provide greater
management emphasis on the very different needs of wholesale
and retail customers. This separation is intended to be
introduced by the end of the year. BT will be discussing its
plans with Oftel, the UK regulator.
The wholesale business will use its comprehensive UK
asset base to satisfy the rapidly growing demand for high
quality network solutions in the UK. The retail business will
continue to provide account-managed and packaged solutions
allowing customers to benefit from the full range of BT
products, including mobile and e-commerce services.
Increasingly, this business will service its customers using e-
business technologies and channels.
The new businesses will trade on an arm's length basis
with each other. This should allow regulation to be
concentrated primarily on the wholesale business which will
supply services to other operators and service providers as
well as the UK retail operation and enable the UK retail
operation increasingly to be treated in the same way as other
companies in the competitive market in which it operates.
Sir Peter Bonfield said: 'I am pleased to say Bill
Cockburn, group managing director of BTUK, will continue to
work with me to complete this transition and during this
period he will retain executive responsibility for the UK
fixed businesses. Thereafter he will retire from the BT plc
board.'
Paul Reynolds, currently managing director, network and
information services, is appointed managing director of the UK
wholesale business and will join the Group Executive Committee
with immediate effect. He will work closely with Bill
Cockburn during the transition.
The position of managing director of the UK retail
business remains to be filled and will be announced in due
course.
The new high growth international businesses
Ignite is a data-centric, broadband IP business focused
on corporate and wholesale markets. It will deliver a full
range of services to customers in the UK and continental
Europe. Ignite will have a sales force of more than 4,000
people across Europe, more than 50 per cent directly
controlled by BT. It will use its existing 50,000 route
kilometre fibre backbone - already the largest in Europe - to
exploit explosive growth in data transport and value-added
services, including hosting and solutions opportunities.
Ignite will also include BT's large scale international
solutions businesses, Syntegra and Syncordia, which have 2,000
sales and marketing people and turnover today of £1.5 billion.
These businesses will provide Ignite with critical
differentiating service capabilities including large scale
network outsourcing and bespoke e-commerce solutions.
A planned investment of around £4 billion over the next
three years will expand the backbone network and web hosting
capabilities and realise ambitious local access strategies.
These involve new city fibre networks, wireless local loop,
and deployment of xDSL in the UK and across Europe as
regulation permits. The backbone network is expected to grow
to 70,000 route kilometres in 2001, reaching the 100 most
important commercial centres today and 250 by the end of 2001.
Ignite's hosting platform will be expanded to 19 centres in
nine countries with 800,000 square feet of usable space by
December 2001.
Alfred T. Mockett is appointed chief executive of Ignite.
BTopenworld is a mass market business focused
increasingly on broadband services. It will bring together in
a single business all BT's existing UK service providers
(ISPs) and portals and Open, BT's digital interactive
television joint venture. It will also include BT's
international wholly-owned ISPs such as Infinito (Italy),
Arrakis (Spain), and Ocean free (Ireland) as well as BT's
interests in the ISPs of its joint ventures across the world.
BTopenworld will also be responsible for Genie, Europe's
leading mobile portal and service provider which currently has
more than 600,000 customers. Genie was the first mobile ISP to
be introduced in Europe, first to introduce a commercial WAP
service and is also being rolled out in a number of BT's in-
country operations including Telfort in the Netherlands.
BTopenworld will be responsible for building the
platforms, aggregating the content, and marketing the services
required to position BT at the crest of the second wave based
upon broadband and mobile access technologies. All services
will be linked through each customer's Personal openworld
Portal (PoP), a single point from which customers can access
services via mobile phone, PC or TV. Over the coming months,
BT will consolidate its consumer ISP brands in a manner
designed to extract the maximum benefit from a
local/global brand strategy. BTopenworld's UK retail
broadband launch will be announced shortly. Services will be
highly personalised, delivering information and content
tailored to the individual.
BTopenworld already has 2.5 million equity customers,
making it the third largest European ISP.
Andy Green is appointed chief executive of BTopenworld
and Ben Andradi will be the chief operating officer.
BT Wireless is an international mobile business
emphasising mobile data and next generation services. It will
comprise BT's interests in mobile assets worldwide, including
BTCellnet, BT's strong portfolio of European, Asia Pacific and
North American mobile assets and the Advance alliance with
AT&T. It will be responsible for marketing services to both
the business and consumer segments and will package access,
fixed line and BTopenworld products where possible. BT
Wireless has operations in 14 countries with nearly 15 million
equity subscribers. In the year to March 2000 the total
turnover of BT Wireless is expected to be around £4.5 billion.
BT has created significant value in international mobile
markets, having invested £6 billion in the last year. In
addition, the recently announced transaction with Japan
Telecom gives BT Wireless a substantial position in both
second and third generation mobile in Japan, the world's
second largest mobile market. BT Wireless will be responsible
for continuing this successful investment programme as next
generation mobile broadband networks and services evolve.
John D. Zeglis, president designate of AT&T Wireless,
said: 'I am pleased to see that BT is bringing even more focus
to its wireless service initiatives. We look forward to
continuing to work with BT in our Advance alliance to produce
seamless international services that delight our wireless
customers.'
Peter Erskine is appointed chief executive of BT
Wireless.
Yell is BT's international directories and e-commerce
business. It operates in the classified advertising market
through both printed and electronic media, including the
Yellow Pages directories, Business Pages, Talking Pages,
Yell.com (its portal), and Yellow Book in the US.
John Condron is appointed chief executive of Yell.
Concert
Concert, which started operations in January 2000, is the
leading global communications provider for multinational
business customers, international carriers and service
providers worldwide. The new strategies and restructuring
announced today will result in the provision of deeper in-
country networks to Concert in Europe allowing even higher
levels of on-net sales. Additionally the Ignite sales and
solutions teams will focus strongly on creating increased
sales opportunities for Concert in Europe.
Potential listings
The new structure is designed to facilitate separate
listings for some of BT's businesses either individually or in
combination. The potential benefits from IPOs are being
evaluated and businesses will be listed where this is in the
best long term interest of shareholders. Following the
strengthening of Yellow Pages over the last year, BT intends
to list Yell by the end of this year.
Other appointments
Pat Gallagher, currently President BT Europe, is
appointed Group Strategy and Development Director. He will
report to Sir Peter Bonfield and will join the Group Executive
Committee with immediate effect.
- - - - - - - - - - - - - - - - - - -
Further information on each of the businesses can be
found in the Annexes.
See Annex 5 for important information regarding the
presentation of financial information in the press release.
BT is being advised by N M Rothschild and Morgan Stanley
Dean Witter.
- - - - - - - - - - - - - - - - - - - -
Inquiries about this news release should be made to the BT
Group Newsroom on its 24-hour number: 020 7356 5369. (From anywhere
in the UK, including London, dial the complete number, including
the prefix 020. From outside the UK, dial + 44 20 7356 5369.)
All news releases can be accessed at our web site: http://www.bt.com
NOTE TO PICTURE DESKS: High resolution digital images are
available from NewsCast at www.newscast.co.uk - phone 020 7608
1000.
NEWS CONFERENCE AUDIO DIAL-IN FACILITY
A dial-in audio facility will be available for journalists
unable to attend the news conference being held today, April
13, at BT Centre in London.
The call runs from 1200 hrs BST (0700 EDT) until 1330 hrs BST
(0830 EDT)
The number to dial is 01296 480100 from within the UK, and +44
1296 480100 from outside the UK. Then ask for 'BT News
Conference'.
Annex 1
Ignite
Business description
Ignite, managed by Alfred T. Mockett, is a new data-centric
broadband IP business focused on corporate and wholesale
markets. It is unique in its breadth of services, reach and
depth of network, and customer-facing capabilities. Its
comprehensive customer propositions flow from a broad resource
base:
* An outstanding international broadband IP communications
company encompassing the UK and continental Europe that
can also, through AT&T and Concert, deliver a full range
of services to customers.
* The largest continental-scale broadband-enabled IP
network in place.
* The definitive broadband IP backbone and access network
in the UK (BT's Colossus router network, fibre and DSL
rollout will be owned by Ignite).
* Ambitious strategies for city fibre rings, xDSL and WLL
broadband access.
* A sales force of 4000 across Europe.
* A comprehensive range of customised e-solutions and
packaged application services
* A new applications service provider (ASP) business.
With its backbone network, Ignite will target corporate
customers, SMEs, dot-coms and other licensed operators in key
European countries.
Network coverage and investment
Ignite has the broadest and deepest network coverage in
Europe. In addition to the Farland transborder network it
owns fibre in five European countries. Ignite's customer
offers will be facilities based with high bandwidth and high
fibre count inter-city and local networks providing end-to-end
fibre connectivity. It operates a scalable, high capacity,
state of the art DWDM network that supports IP and ATM
technologies.
Together with its JV partners, Ignite's inter-city fibre
network today is 50,000 route kilometres long and connects 100
cities in 9 countries across Europe. It also has city fibre
rings in the UK and in nine continental European cities. BT
intends to grow the backbone network to 70,000 route
kilometres in 2001. By end 2001, its inter-city networks are
expected to connect 250 cities in 16 countries.
To complement Europe's biggest IP backbone, Ignite plans
to invest around £4 billion, alongside BT's joint venture
partners, over the next three years in an ambitious rollout
programme for city fibre networks, WLL and xDSL technologies.
In 2001 it intends to have city fibre networks in 15 more
cities. In Germany, through Viag Interkom, it already holds
205 WLL licences. xDSL networks will be rolled out in other
European countries wherever possible, building on the
successful rollout of ADSL in the UK.
Ignite's connection to the Concert global backbone gives
it reach to all major commercial centres across the globe.
Web hosting
Ignite's web hosting operations will be directly
connected to a wide-reaching broadband IP backbone and will
provide the wide range of co-location, web hosting and
networking professional services that are now critical success
factors for companies ranging from start-ups to dot-coms and
'clicks and mortar' businesses.
Ignite takes in BT's existing seven data centres in
Europe, and will, by the end of 2001, expand to 19 centres
with a total of 800,000 square feet of usable space. Ignite
will be leading on web hosting in Europe for AT&T and Concert.
Applications and E-Commerce Platforms
Building on the IP and web hosting services of BT and its
joint ventures, Ignite will provide its corporate customer
base with a full range of customised and pre-packaged inter-
linked applications and services. Ignite's focus will be on
web-centric products and services creating compelling
propositions to web-enable companies and to provide fully-
fledged operating and trading platforms on the Internet.
BT is launching a new applications service provider (ASP)
business, which will expand aggressively from an initial
market focus in the UK and Europe into the rest of the world.
The business will operate in three principal areas:
* Providing 'applications on tap': applications will be
accessible via the Internet, and will include payroll,
human resources and customer relationship management
packages.
* Creating and supporting 'trading exchanges' - tightly
defined vertical business communities - both in
partnership with VerticalNet and CommerceOne, and on its
own. BT has already created Healthnet and Vio, for the
health and publishing industries respectively.
* Acting as an 'ASP enabler', focused on corporates, for
independent software vendors who wish to provide their
own applications on an ASP basis.
E-Solutions for large corporates
A unique differentiator for Ignite is the powerful
combination of Syntegra and Syncordia.
Syntegra is a leading systems integrator and provider of
bespoke e-commerce solutions. Its recent acquisition of
Control Data Systems transformed it into a player with global
capabilities and reach, with customers in more than 60
countries.
Syncordia is a leading provider of integrated information
and communications solutions. Underpinned by the use of the
Internet and associated technologies, they are based on end to
end managed IP networks and the provision of e-business and e-
CRM applications on those networks.
Providing a major competitive advantage in their own
right, these services will also complement Ignite's IP, web
and application hosting offerings to corporate clients, thus
enhancing the overall value proposition of Ignite to its
client base and increasing its competitiveness.
Customers and channels
To allow customers the maximum choice and flexibility,
Ignite will offer a multi-channel strategy, selling directly
and alongside Concert to corporate customers in BT's
controlled operations in Ireland, the UK, Spain, Belgium and,
as announced today, in the Netherlands. Ignite will continue
to work with its joint venture partners in Europe and with the
UK sales channel for UK corporate, government and SME
customers.
Ignite will innovate and provide services in each of its
key focus areas - transport, IP services, hosting and
application service provision. Through Syncordia and Syntegra
it will have the ability to package, integrate, and operate
solutions throughout the world. For customers this means a
single point of contact for 'turn-key' solutions and the
ability to develop more rapidly and implement new e-commerce
and e-business solutions - a key differentiator in business
today.
Ignite will provide its services through a 4,000 strong
sales force (50 per cent directly controlled). In addition to
the 2,000 solutions consultants from Syncordia and Syntegra, a
specialist 350-strong data sales force will provide support
for wholesale channels and Concert.
Financials
In the year to March 31 2000, total turnover is expected
to be £2.9 billion, £1.5 billion from the solutions business
and £1.4 billion from the data, IP & voice business.
Total turnover is estimated to grow by more than 35 per
cent per annum over the next three years, achieving turnover
in excess of £7 billion by 2003. Over the next 3 years, it
is estimated that the turnover of the solutions business will
grow by more than 20 per cent per annum with turnover of
hosting, IP, applications, data and voice increasing by more
than 50 per cent per annum.
Ignite is expected to experience a period of losses due
to its investment in expansion of IP and Broadband networks
and in its new ASP business after which it is expected to
return to positive EBITDA around 2003. It is anticipated that
total capital expenditure over the next three years will be
approximately £4 billion.
Operational and financial information
1. Operational Information
Today End 2001
Network route km (a) 50,000 70,000
Pan European network:
- cities 100 250
- countries 9 16
Metropolitan Networks:
- City Fibre Networks 9 cities 24+
- DSL 400 Exchanges 1000 Exchanges
European Hosting
- Data Centres 7 19
- Usable space 85,000 800,000
(sq. ft)
(a) Pan-European backbone + domestic inter-city networks
2. Financial Information
Pro forma Estimate
Year Ended Year Ended
March 31 March 31
1999 2000
Ignite - Data, IP
& Voice
Total turnover * (£bn) 0.9 1.4
EBITDA * (£bn) (0.1) 0.0
EBIT * (£bn) (0.3) (0.5)
Capital 0.2 0.5
expenditure (£bn)
Investments (£bn) 0.3 2.0
Ignite - Solutions
Total turnover * (£bn) 1.2 1.5
EBITDA * (£bn) 0.1 0.1
EBIT * (£bn) 0.1 0.1
Capital 0.1 0.1
expenditure (£bn)
Investments (£bn) 0.0 0.2
Ignite - Total
Total turnover * (£bn) 2.1 2.9
EBITDA * (£bn) 0.0 0.1
EBIT * (£bn) (0.2) (0.4)
Capital 0.3 0.6
expenditure (£bn)
Investments (£bn) 0.3 2.2
* includes share of joint ventures and associates; total
turnover includes intra group turnover.
Annex 2
BTopenworld
Business Description
BTopenworld, managed by Andy Green, is an international, mass
market Internet business which is focused increasingly on
broadband and mobile services. It will be a new organisation
with an Internet focus and culture.
The business is a significant operation today with
considerable potential in the UK and internationally:
* It consolidates into a single business all of BT's
existing mass market Internet activities
* It has 2.5 million equity customers, making it one of the
largest mass market Internet companies in Europe
* In the UK, BTopenworld has launched its Genie mobile
Internet service and will this month announce its
comprehensive broadband service.
* It intends to launch similar mobile and broadband
services in Europe. For example, a new mobile Internet
service will be launched in the Netherlands within the
next two months.
* BTopenworld intends to offer its customers its Personal
openworld Portal (PoP) allowing access via mobile phone,
PC or TV. Services will be content rich (over 50 new
content deals have been agreed in the last three months)
and personalised.
Customer Base
The business today has 2.5 million equity customers
(excluding 1.1 million wholesale Virtual ISP (VISP) customers)
which makes it one of the largest mass market Internet
companies in Europe. It has substantial reach outside its
domestic UK market. Of the total 2.5 million customers,
approximately 1.3 million are in the UK, approximately 0.9
million are in continental Europe and approximately 0.3
million are in other countries (mainly Asia-Pacific).
Approximately 1.7 million customers are served by companies
which will be wholly owned by BTopenworld and approximately
0.8 million represent BTopenworld's equity interests in BT's
joint ventures.
The business will assume responsibility for BT's wholly
owned ISPs in the UK, BT Internet (a business providing
Internet access for a flat fee of £9.99 a month for unlimited
off peak access) and BT Click (a 'free' ISP providing Internet
access for the cost of a local phone call). BTopenworld will
manage Talk21, BT's free e-mail service.
Internationally, it will take direct management control
over BT's existing Internet businesses including Telfort
Internet (Netherlands), Oceanfree.net (Ireland), Infinito
(Italy), Arrakis (Spain) and Clear.net (New Zealand).
BTopenworld will also be responsible for Genie, Europe's
leading mobile portal and service provider. Genie currently
has more than 600,000 customers, of which over 450,000 were
active during March. Genie was the first mobile ISP to be
introduced in Europe, the first to introduce a commercial WAP
service and the first to launch WAP e-mail. Genie services
are being rolled-out in a number of BT's in-country
operations.
The business will manage BT's Internet ventures,
including Looksmart, ExciteUK and Line One in the UK, and be
responsible for the Internet activities of other overseas
ventures including Planet Interkom (Germany), Freesurf
(Switzerland), and Mantra On-Line (India). BTopenworld will
also run BT's VISP services which provide Internet access
service on a wholesale basis for companies such as Tesco and
WH Smith.
It will also be responsible for BT's investment in Open,
the joint venture providing interactive services through
digital satellite television to 2.8m homes. Over 600,000
customers have registered for Opentalk, the e-mail service
from BT, and of these approximately 40 per cent are regular e-
mail users.
BTopenworld intends over time to rationalise and
integrate its UK and International products and brands.
The Second Internet Wave
BTopenworld believes that the consumer Internet market
provides an attractive opportunity. Significant growth is
expected as more and more consumers embrace the Internet
across Europe. The advent of broadband and mobile will be a
disruptive event, creating a second Internet wave and
challenging established players. This second Internet wave
will be very different from the Internet experience to date.
It is characterised by the following key features:
* Always on - providing customers with instant access at
all times
* Content rich - providing customers with audio and video
rich material
* Localised and personalised - providing customers with
information and content tailored to their preferences and
requirements
* Delivered seamlessly over multiple devices and
technologies - providing customers with access to their
chosen content matter through their mobile phone, TV or
PC.
BTopenworld believes it can exploit the market
discontinuities which result from this second Internet wave to
develop increased momentum, enhance its market position and
achieve rapid growth. It expects its customer numbers to more
than double in each of the next two years from its current
base of 2.5m equity customers.
BTopenworld's businesses are already expanding rapidly.
For example, BT Internet has added 100,000 paying customers
since its re-launch at the beginning of March, while Infinito
in Italy has attracted 310,000 active users in the three
months from its launch.
Launch of Mobile and Broadband Services
In the UK, BTopenworld intends to progress its business
rapidly. It has already launched its mobile Internet service,
Genie, with great success. Genie WAP page impressions reached
1.5 million in March while web page impressions are growing by
5 million a month. Later this month, BTopenworld will
announce its plans for the roll-out of broadband Internet
services across the UK.
It plans to roll-out similar mobile and broadband
services across the rest of Europe, building on the platform
provided by BT's existing ventures, Ignite's network and
hosting capabilities and BT Wireless's customer base and
networks. BTopenworld will also seek to maximise the benefits
of BT's scaleable systems and infrastructure. As an example,
BTopenworld will launch a new mobile Internet service in the
Netherlands within the next two months.
Personal openworld Portal
Central to the proposition which BTopenworld will offer
its customers will be the Personal openworld Portal (PoP), a
single point from which customers can access services via
mobile phone, PC or TV. Services will be content rich,
localised and personalised delivering information and content
tailored to the individual. BTopenworld is significantly
enhancing the quality of the content it can offer to its
customers - over the past three months more than 50 new
content deals have been agreed with many more in the pipeline.
Operational and Financial Information
1. Operational Information
Country Ownership Active Users
per cent (a)
000s
Wholly Owned ISPs
BT Internet UK 100 290
BT Click UK 100 436
Genie UK 100 451
Infinito Italy 100 310
Arrakis Spain 100 133
Ireland On-Line Ireland 100 30
Oceanfree.net Ireland 100 70
Clear.net New Zealand 100 53
Telfort Internet Netherlands 100 Launched in 60
days
Total Wholly owned 1,773
Joint Venture
ISPs
Line One UK 50
Yu.com Belgium 50
Mantra On-Line India 49
Planet Interkom Germany 45
Freesurf Switzerland 34
Telenordia Sweden 33
SmarTone Hong Kong 20
ODN Japan 20
MaxisNet Malaysia 33
Starhub Singapore 19
AT&T Canada Canada 9
Total JV ISPs 775
TOTAL 2,548
Other Operations
BT Looksmart Inter- 50
national
Excite UK UK 50
Open UK 33
(a) Defined as 30 day active users wherever possible
2. Financial Information
Pro Forma Estimate
Year Ended Year Ended
March 31 March 31
1999 2000
Total turnover * (£bn) 0.05 0.1
EBITDA * (£bn) (0.1) (0.3)
EBIT * (£bn) (0.1) (0.3)
Investments (£bn) 0.1 0.1
* includes share of joint ventures and associates; total
turnover includes intra-group turnover
Annex 3
BT Wireless
Business description
BT Wireless, managed by Peter Erskine, is an international
leader in mobile communications and is building, and will
continue to build, scale through organic and inorganic
development. It will be responsible for the continued
development of BT's global mobile services as well as in-
country operations and for BT's move into broadband mobile
networks through its 3rd generation activities globally. The
business will comprise all BT's mobile operations worldwide
for the first time under a single management team. It will
have:
* Extensive international reach with the inclusion of
BTCellnet in the UK, BT's strong portfolio of European,
Asia Pacific and North American mobile assets and the
Advance alliance with AT&T in the US.
* A portfolio spanning 14 countries with significant
international reach and nearly 31 million venture
customers outside the UK.
* A strong and continuing commitment to growth in mobile,
having launched new mobile networks in the last two years
in Germany, Netherlands and Singapore, with Blu in Italy
set to launch next month.
* An expanded footprint through the stakes it has acquired
in operators in Japan, Malaysia, Korea, Hong Kong, Canada
and Ireland over the same time period.
* Global scale and reach through the Advance alliance,
giving it the world's largest combined GSM-TDMA footprint
covering 198 GSM networks in 100 countries and 140 TDMA
networks in 50 countries.
Of huge strategic significance is BT Wireless' investment
in Japan Telecom. The most recent transaction, announced last
month, will bring BT's holding in J-Phone in Japan to about 20
per cent. BT Wireless will have a substantial investment in
one of the three players which will contest the world's second
largest mobile market. The J-Phone investment delivers
tremendous knowledge transfer benefits - Japan will be early
to market in 3G and the Japanese industry continues to be
innovative in applications and terminals for the future.
As announced today, we have increased our investment to
100 per cent in Telfort, demonstrating our confidence in that
business.
Advance Alliance
The Advance alliance gives BT Wireless the benefits of
global scale and reach. The alliance provides the ability to
reach over 55 million subscribers across the world in 18
countries, bringing together strong positions in North
America, Western Europe and Asia. In terms of scale, the
Advance alliance represents one of the two biggest customer
potentials in the industry measured by equity weighted
population.
Through Advance, BT has even more influence in the
development of the mobile industry in (i) obtaining best
commercial deals from suppliers, (ii) the development of new
standards and (iii) attracting partners for developments such
as mobile Internet.
Customers and channels
BT Wireless will deliver products which meet customers'
needs, now and in the future, for highly personalised voice,
mobile multimedia and packaged services. In the UK it will
service the needs of corporates, SMEs and the mass market. The
companies and joint ventures comprising BT Wireless will act
as the prime channel to mass market and SMEs in key markets
outside the UK, retailing mobile only and packaged and
integrated mobile, Internet and fixed services directly to
customers. Of particular importance is the provision of
personalised broadband Internet services from BTopenworld
delivered across 3G networks. In addressing corporates, BT
Wireless intends to package and retail its corporate product
portfolio through BT's ventures and through Ignite and
Concert, providing extensive access to the world's top MNCs.
Technical leadership
The business brings strong operational and technical
leadership to its ventures. As lead technology partner, BT
Wireless will drive the technological innovation of its
ventures by making available best in class technology and
operational capabilities. To improve the operational
performance of BT Wireless ventures and to align strategic and
technology positioning, senior BT executives are deployed in
key management positions in the ventures. Through BT
Wireless, BT intends to accelerate value add to its ventures,
the development of new multi-market products, and the capture
of synergies across its businesses.
Data and broadband
BT Wireless will have a particular focus on the
development of BT's data and 3G operations, working with its
ventures on acquiring licences, securing appropriate
technology and developing next generation mobile broadband
customer services. BT Wireless ventures are currently making
significant investment in GPRS technology allowing 'always on'
packet based mobile Internet services. In the UK, BTCellnet
will launch GPRS services in the summer. BT Wireless expects
to make substantial investments in 3G licences and networks
over the next two years. In addition, it will continue to
develop global strategic relationships contributing to the
future success of its ventures in mobile multimedia. In this
context, BT has recently concluded global agreements with
Microsoft (with AT&T Wireless Services), Sharp and Panasonic.
Financials
The business currently has estimated total turnover for
the year ended March 2000 of £4.5 billion, a growth of 67 per
cent over the last year. Global wireless market turnover
grew by 35 per cent over the last year. For the year ended
March 31 2000, BT Wireless EBITDA is expected to be £0.7
billion.
In terms of equity customers, from December 1997 BT
Wireless has grown by 460 per cent, including the impact of
recently announced transactions, second fastest when compared
to other leading mobile operators. Over the last 12 months,
BT Wireless equity customers, including the impact of recently
announced transactions, has grown by around 170 per cent.
Looking to the future, BT Wireless is well positioned for
rapid organic growth owing to the geographic and maturity mix
of its mobile portfolio.
BT Wireless turnover and equity subscribers are expected
to more than double in the next three years whilst EBITDA is
expected to be more than 3 times the current level.
BT Wireless is becoming a more international business
with the proportion of non-UK turnover increasing from around
35 per cent for the year to March 2000 to around 60 per cent
in 3 years time.
Operational and financial information
1. Operational Information
Following the proposed transactions in the Netherlands
and Japan, BT Wireless includes the following operations as
well as the Advance commercial arrangement:
As at Country Stake Total Equity Equity
March 2000 of held subs subs pops
Operation (per (m) (m) (m)
cent)
BT Cellnet UK 100.0 7.4 7.4 59.2
Esat Ireland 50.5 0.6 0.3 1.8
Digifone
Viag Germany 45.0 1.3 0.6 37.1
Interkom
Telfort Nether- 100.0 0.5 0.5 15.8
Mobile lands
SFR France 20.8 8.1 1.7 12.2
Airtel Spain 17.8 5.6 1.0 7.1
Blutel Italy 20.0 0.0 0.0 11.5
SmarTone Hong 20.0 0.8 0.2 1.3
Kong
LG Telecom Korea 24.1 3.2 0.8 11.1
Maxis Malaysia 33.3 0.8 0.3 7.4
Bharti India 44.0 0.2 0.1 7.0
Cellular
Starhub Singapore 18.0 0.0 0.0 0.7
Rogers Canada 16.9 2.2 0.4 5.2
Cantel
J-Phone Japan c 20 7.9 1.5 24.5
Total 38.6 14.8 201.9
2. Financial Information
Pro forma Estimated
Year Ended Year Ended
March 31 1999 March 31 2000
UK
Total turnover* (£bn) 1.9 2.8
EBITDA * (£bn) 0.4 0.4
Capital Expenditure
and investments (£bn) 0.6 3.9
Equity subscribers (m) 2.9 7.4
Non-UK
Total turnover * (£bn) 0.8 1.7
EBITDA * (£bn) 0.0 0.3
Capital Expenditure
and investments (£bn) 1.0 2.5
Equity subscribers (m) 2.5 7.4
Total
Total turnover * (£bn) 2.7 4.5
EBITDA * (£bn) 0.4 0.7
Capital Expenditure
and investments (£bn) 1.6 6.4
Equity subscribers (m) 5.4 14.8
Note: Equity subscribers includes the recent Japan Telecom
transaction and the Telfort transaction announced today
* includes share of joint ventures and associates; total
turnover includes intra-group turnover
Annex 4
Yell
Business description
Yell, managed by John Condron, is a financially successful
business with nearly 600,000 customers in the UK and the US
and well developed e-business capabilities. It services over
40 million households and businesses through a wide range of
printed and e-business to business and e-business to consumer
products. Following a recent series of acquisitions,
totalling nearly $700 million, Yell now owns the largest
independent Yellow Pages business in the US, the most valuable
classified advertising market in the world. In addition to
Yellow Pages and Business Pages directories, the portfolio
includes:
* Yell.com, a leading Internet and WAP directory portal
* Talking Pages, an operator assisted finder service,
targeted at people on the move
* The Business Database, a major information and analysis
provider to the direct marketing industry in the UK.
Through the marketing of web sites, URLs and banner
advertising, Yell has already developed an Internet
customer base and significant e-commerce expertise.
The core directory products in the UK and the US are
amongst the fastest growing in a global industry worth over
$23 billion. Together with existing new media products, they
provide a firm foundation for expansion. New media products
and services should continue to capitalise on existing
relationships with SMEs and the access to this vital market
provided by its 2000 strong sales team. This long-standing
business relationship is a focus for significant growth in e-
commerce solutions for the SME sector in the UK and US.
Recent international expansion through the acquisition of
Yellow Book USA as well as its new media developments has now
positioned Yell to identify and capitalise quickly on new
growth opportunities. A listing of Yell will focus attention
on the key strengths of the business and should enable it to
attract innovative business partners. The new business should
have the opportunity to seek independent investment to speed
major expansion plans and the means to attract and reward the
best people to help create and exploit new markets and e-
commerce opportunities.
Financial Information
Pro forma Estimate Year
Year Ended Ended
March 31 1999 March 31 2000
Turnover (£bn) 0.5 0.6
EBITDA (£bn) 0.2 0.2
EBIT (£bn) 0.2 0.2
Investments (£bn) 0.0 0.4
Annex 5
Financial Information
All financial information in this press release is unaudited
and for illustrative purposes only. It includes allocations
and apportionments of turnover, costs, capital expenditure and
investments.
Information on the businesses for the year ended March
31, 1999, is a proforma estimate of the results of each
business had they traded throughout that year. It is based on
the BT Group accounts for the year ended March 31, 1999, on
which the auditors made an unqualified report which did not
contain a statement under Section 237 (2) or (3) of the
Companies Act 1985, which have been delivered to the registrar
of companies.
Information for the year ended March 31, 2000 is
estimated and is based on the forecast of total operating
profit presented at the announcement of BT's results to
December 31, 1999. It should be read in conjunction with the
principal assumptions underlying that forecast, as described
in the announcement of BT's third quarter results. The actual
results for the year to March 31, 2000 may differ from those
estimated.
BT expects to make its preliminary announcement of
results for the year to March 31, 2000 on May 18.
Year ended March 31, 1999
The table below shows a proforma of the results of the
businesses for the year ended March 31, 1999 for illustrative
purposes. It is a restatement of the actual results for that
year showing the businesses had they traded throughout that
year. Concert includes the elements of the BT business now
transferred to the Concert joint venture.
** EARNINGS
TOTAL BEFORE
TURNOVER ** EBITDA INTEREST & TAX
£bn £bn £bn
UK Wholesale & 11.7 5.4 3.4
Retail
Ignite 2.1 0.0 (0.2)
Btopenworld - * (0.1) (0.1)
BT Wireless 2.7 0.4 0.1
Yell 0.5 0.2 0.2
Concert 1.9 0.3 0.3
Eliminations and (0.7) 0.1 (0.1)
other
TOTAL 18.2 6.3 3.6
* approximately £50 million.
** Earnings before interest and tax and Earnings before
interest, tax, depreciation and amortisation (EBITDA) are
before goodwill and exceptional items and include the share
of results of joint ventures and associates.
Turnover between businesses is included in total turnover of
the originating business and eliminated under 'eliminations
and other'. 'Eliminations and other' also includes Group
redundancy costs.
Annex 6
Quotes
NORWAY : Tormod Hermansen - Chairman, Telenor AS
'Telenor very much supports this move by BT as it is
consistent with our own approach. We believe it will enhance
our partnership and deliver greater co-operation, particularly
in the important areas of Internet, Mobility and IP.'
MALAYSIA : Ananda Krishnan - Chairman, Maxis Binariang
'This move confirms BT's position as the No.1 global partner.'
JAPAN : Koichi Sakata - Chairman, Japan Telecom Co. Ltd.
'This announcement by BT reinforces our strong partnership and
provides further opportunities to make Japan Telecom the
number one challenger in Japan - across the full range of
data, mobile and Internet/multimedia services.'
Annex 7
Forward Looking Statements
Nothing contained in these materials constitutes an offer of
any securities for sale.
Certain statements in these materials 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: BT's
ability and positioning to become the world leader in the next
wave of the communications revolution as a result of the
restructuring; the development and growth of the
communications industry; the benefits and advantages of the
restructuring; the positioning of BT's new businesses in
certain growth areas of the communications industry; the
creation of value; the expectation regarding total turnover
growth in Ignite and the elements thereof over the next three
years; the expectation regarding the level of turnover in
Ignite by 2003; the expectation regarding Ignite returning to
positive EBITDA by 2003; the expectation regarding BT
Wireless' turnover and equity subscribers doubling in the next
three years; the expectation that BT Wireless' EBITDA is to be
three times the current level in the next three years; the
expectation regarding the increasing proportion of non-UK
revenues by BT Wireless in three years time; the expectation
regarding the doubling in each of the next two years of
BTopenworld's customer numbers; regulation of the UK fixed
wholesale and retail businesses as a result of the
restructuring including the expectation that regulation will
be focused on the wholesale business; expectations regarding
listing of some of BT's businesses, in particular Yell;
capital expenditure and investment plans; the expansion and
growth of networks, including the backbone and inter-city
networks; Ignite's web hosting plans; expectations regarding
applications, service and product offerings including the
launch, roll out and expansion of such offerings; expansion
plans, in particular of Ignite's applications service provider
business; expectations regarding brand strategies; the capture
of synergies; the competitiveness of the new businesses
created by the restructuring; and the growth and other
opportunities created for the new BT businesses by the
restructuring and the ability and the positioning of these
businesses to take advantage of such opportunities.
Although BT believes that the expectations reflected in
these forward-looking statements, and the assumptions that
underlie them, are reasonable, it can give no assurance that
these expectations or assumptions 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 new
businesses; future regulatory actions and conditions in BT's
and its new businesses' operating areas, including competition
from others in the UK and other international communications
markets; selection by BT and its new businesses of the
appropriate trading and marketing models; success in
applications for 3rd generation mobile licences in the UK and
elsewhere and the costs associated with building networks if
such licences are granted; technological innovations,
including the cost of developing new services and products;
the need to increase expenditure improving the quality of
service; material increases in overtime staff or other costs;
the timing of entry and profitability of BT and its new
businesses' in certain communications markets; significant
changes in market share for BT and its new businesses'
principal products and services; and fluctuations in foreign
currency exchange rates.