BT received clearance on Tuesday to sell its stake in Blu, just before Wednesday’s AGM.
An Italian court ruled on Tuesday that mobile operator Blu had not engaged in unfair competition in last year’s 3G license auction. Blu will retain its GBP1.2 billion deposit, paving the way for a GBP250 million sale of BT’s 20% stake. But the news failed to bring much cheer to Wednesday’s AGM. The sale is another reminder of BT’s failed strategy.
The company has made some sensible decisions since Sir Christopher Bland took over as chairman, cutting debt at the expense of non-strategic assets such as Yell. Axing AT&T joint venture Concert looks like the best move, given its lack of either profitability or fit. And while the jury is still out on the plan to spin off fast-growth mobile, Internet and business operations from the core fixed-line business, it has been well received by analysts.
But BT has still lost over half its value since 1999. And worse, that isn’t just through overpaying for acquisitions: BT’s actual businesses are failing too. BT Wireless is only the UK’s number three mobile operator. BT Openworld’s repeated delays in rolling out DSL have put the UK far behind the rest of Europe in broadband Internet.
France Telecom and Deutsche Telekom have also built up huge debts and seen share prices fall. But Orange and T-Mobile are the world’s strongest mobile phone groups behind Vodafone, Wanadoo and T-Online are major forces in European Internet, and even the core fixed-line operations are seeing slower decline. BT is far behind, having thrown away its huge advantage as the incumbent telco in one of the world’s largest markets.
Realistically, BT won’t be able to catch up. Instead, it must focus on building the margins for the products it does offer. The breakup will hopefully allow it to become more fast-moving and streamlined, competing with some success in the corporate market. Meanwhile, revenues from the fixed retail voice operations will continue their quiet and slow decline.
