By improving customer service and reducing the cost of failure, BT has reduced its costs over the last two years. The improved efficiency is freeing up resources to allow BT to accelerate its investment plans.
Livingston also announced a major expansion of BT’s fibre investment programme. Assuming an acceptable environment for investment, he said BT’s broadband programme could potentially be extended to make fibre available to around two-thirds of UK homes by 2015. This total investment of around £2.5 billion will be managed within BT’s current levels of capital expenditure. BT had previously undertaken to invest £1.5bn getting fibre to around 40 percent of homes in 2012.
BT’s investment of £2.5 billion in fibre is one of the largest in the world that doesn’t rely on public sector funding and where the network is open to all service providers on an equal basis.
BT’s programme will make the UK one of the best connected countries in the world for next generation broadband. The roll-out is already under way with four million homes due to have access to fibre broadband by the end of 2010.
The expansion of BT’s network will bring competition and consumer choice given the network is open. Such competition is beneficial for consumers and businesses as it helps to ensure that prices are kept as low as possible, reinforcing the UK’s position as one of the best value countries for communications.
BT also said today it will, within its EBITDA outlook for 2010/11, invest a further £200 million; mainly in the areas of fibre, enhancing its TV services, introducing other new consumer services and building on opportunities in BT Global Services, particularly in the Asia Pacific region.
Television is a potential growth area for the company and one that will benefit from the roll out of faster broadband. BT will offer a range of new television services ranging from a huge choice of on demand programming, free to air HD programmes and new interactive services. In addition, Ofcom’s recent decision on Pay TV should enable BT to offer Sky Sports 1 and 2 in time for the 2010/11 football season.
Global Services was another area of focus at today’s results, with Livingston saying the division expects to become cash positive in the 2011/12 financial year. He also outlined how the division would invest in new services and expand in the fast growing Asia Pacific market where it already has a strong market presence.
Livingston said: “We have made good progress this year and have now set clear objectives for the next three years.
“We have improved customer service, are transforming the cost base and have more than doubled free cash flow, but there is still a lot more to do.
“We are investing in the future of our business, enhancing our TV offering and building on opportunities in our Global Services business. Assuming an acceptable environment for investment, we see the potential to roll out fibre to around two-thirds of the UK by 2015. This will take our total fibre investment to £2.5bn which will be managed within our current level of capital expenditure.
“During the next three year period we expect to improve our underlying revenue trends, and grow EBITDA and free cash flow, while investing in the business, supporting the pension fund, reducing net debt and paying progressive dividends.
“We are on track with our goal of creating a better business with a better future.”