British Telecom is planning to increase its service range to its customers.
British Telecom, the privatized telecom carrier, has confirmed that it is looking to expand from its core service provision of telecoms. BT has been under increasing pressure to reduce its debts of approximately GBP28 billion and has already announced plans to sell its interests in telecoms operations in Korea, Singapore, Hong Kong and New Zealand. At the weekend it sold its Yell directory business for GBP2.1 billion.
However, BT’s examination of developing its product portfolio also emphasizes that it recognizes the need to address the issue of leveraging its extensive customer base to increase sustainable revenues and profits. BT still has over 19 million residential customers with a market share of nearly 80%. Against this is the fact that it is facing increasing competition and can only realistically expect to see its market share reduce rather than increase going forward.
The most logical step appears to be developing its infrastructure and entering into the broadcast media (a tie-up with British Sky Broadcasting has been mooted). This would allow it to move at a pace more natural to its requirements and retain an element of ‘keeping to what it knows best’.
If BT wishes to be truly bold, an acquisition of an energy supply business would give it the opportunity to increase turnover and products per customer at a stroke, as well as being able to introduce opportunities in creating synergies in costs to serve. The opportunities are significant. Former gas monopoly Centrica, which has leveraged its national coverage to become an electricity supplier, made a sizeable GBP792 million from its electricity business last year.
However, the UK energy market is already undergoing a period of consolidation. If BT does decide to take steps in this direction, it will have to move quickly to take advantage of any opportunities that may arise.
