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July 30, 2015

BT pushes cloud choice, as return to mobile pays off

Cross selling strategy helps to build BT's business.

By James Nunns

The increasing demand for sustainable, secure and compliant cloud-based services has led BT to invest in two new data centres to increase capacity.

The investment comes as part of its Cloud of Clouds vision that seeks to help large organisations to connect easily and securely to applications and data.

An agreement signed with Ark Data Centre’s two sites in the south of England will help BT to develop new managed cloud services for UK organisations. BT appears to be particularly focusing on the public sector with enhanced security.

BT manages cloud infrastructures across both public and private sectors including global financial markets with its Radianz Cloud.

While BT is shouting about its Cloud of Clouds, it is shying away from competing directly with the likes of AWS and Microsoft, instead choosing to integrate with them.

Neil Lock, VP BT Compute, BT Global Services, told CBR: "BT provides an end to end solution combining our Cloud service with our network to ensure an end-to-end service for our customers.

"We think Amazon and Microsoft clouds are also good which is why we have invested to put our network into those Cloud services as well. We want to give customers choice as that is what we believe they will ultimately need."

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This is a common trend as companies seeking to get into the public or private cloud markets find themselves unable and supposedly unwilling to compete with the likes of IBM, AWS or Microsoft.

Instead, companies such as BT need to find verticals in which "Microsoft’s application advantage is neutralised," said Yorgen Edholm, CEO, Accellion.

Despite this investment in its Cloud of Clouds, BT’s main lines of revenue come from other sources such as its consumer division which has been bolstered by a return to the consumer mobile market.

This is reflected in the company’s modest Q1 results with BT, which is set to buy mobile operator EE, reporting an adjusted pre-tax profit rise of 9% to £694 million, but a 2% fall in revenue to £4.3bn.

Paolo Pescatore, Director, Multiplay and Video at CCS Insight, said: "The results also reflect an encouraging start to BT’s return to the consumer mobile market. Having added more than 100,000 users within three months it shows that there is a strong appetite among its customers to sign up to more services.

"This further validates its cross selling strategy, its move back into mobile and with its acquisition of EE, BT will have an extensive retail footprint to showcase a wider range of services."

The cross selling strategy has been greeted in positive fashion by consumers as BT TV customer numbers grew by 60,000 up to 1.2 million. The consumer division saw revenue increase 3% with a 7% increase in broadband and TV revenue.

Pescatore, said: "Overall, this is a modest set of results as BT Consumer continues to stand out with another good quarter of subscriber and revenue growth vs. other segments.

"We are now moving into a couple of key quarters for the company as the new Premier League season kicks off, but more importantly sole ownership of the UEFA Champions League rights. In the last week, BT has stepped up marketing quite considerably for BT Sport Europe, as there is a clear opportunity to target disgruntled Sky Sport subscribers."

The company’s superfast fibre broadband growth continued with an additional 217,000 retail net additions, which means its customers number 3.2 million.

In what will probably displease Sky, BT’s superfast fibre broadband network now reaches 80% of all UK premises.

BT has rounded up a busy period by making up to £129 million available to extend the Government led roll-out of superfast broadband.

The funding, which will be made available to local authorities to reinvest, comes as a result of a clause in the contracts BT agreed with governments and local authorities.

The clause allows the funding it received to be returned or reinvested into further coverage if take-up is better than the 20% expected in its original business case.

Gavin Patterson, CEO of BT, said: "BT’s fibre network is accessible to more than 23 million premises. Four out of five UK homes and businesses can access it and 4.6m are now connected. We’ve hit our original take-up assumption and have rolled out ahead of target and on budget. This is a real success story for the UK."

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