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Anthony Bolton, Britain’s most-fêted fund manager, confessed that he wished he had bought more shares in BT, the UK’s leading telecommunications company.

Paying tribute to Sir Christopher Bland, the BT chairman who presented his last set of annual results yesterday, the Fidelity manager told how the two men had dinner in 2003.

BT was then part of the way through its transformation from debt laden telecoms group into a company that is staking its future on serving the information technology needs of consumers and multinationals.

“My only regret is I did not buy more shares after that key dinner in 2003,” said Mr Bolton.

BT’s shares have risen 50 per cent over the past year, as investors bought into the vision expounded by Sir Christopher and Ben Verwaayen, chief executive.

BT’s fortunes contrast starkly with those of France Telecom and Deutsche Telekom, the former telecoms monopolies in France and Germany.

France Telecom is recovering after a profit warning last year. Deutsche Telekom issued its second profit warning in six months in January and last week strikes began over management’s plans to cut labour costs.

Sir Christopher, who became BT chairman in May 2001, said the company’s one distinguishing feature from its German and French peers was “not having the dead hand of the government shareholder”.

“It protects you from doing the things the market says you have to do,” he added.

However, Sir Christopher admitted BT was “not yet perfect” and said the company had to improve its customer service.

BT is rolling out a new £10bn fixed line telecoms network that could cause chaos for consumers and companies if badly implemented.

Supplying broadband has underpinned BT’s revival and further progress came in its 2006-07 results.

BT secured a 29 per cent share of new customers in the ultra competitive broadband market during the three months to March 31.

That share demonstrates BT has not suffered markedly in the broadband price war unleashed by Carphone Warehouse, a smaller rival in residential telecoms.

Instead, BT has regained its status as the UK’s largest broadband provider, which it lost last year at the merger of NTL and Telewest, the cable television companies.

BT now has 3.7m broadband customers.

The question is whether BT can maintain this momentum.

British Sky Broadcasting is rapidly expanding into broadband and Carphone, after angering thousands of people last year because of poor customer service, is promising an aggressive fightback.

At the moment, Virgin Media looks like the biggest loser.

BT has also made the ambitious pledge that it will have 2-3m customers for its fledgling internet television service, BT Vision, by 2010.

Some analysts are sceptical BT can hit that target. BT Vision, launched in December, at present has 7,500 customers, but the company only last week started a nationwide marketing campaign.

Meanwhile, BT Global Services, the other pillar of BT’s recovery, is demonstrating progress towards its profit target.

BT Global Services is serving the telecoms and IT needs of multinationals and secured orders worth £5.2bn in 2006-07.

Last year it was set a target of reaching a 15 per cent margin on earnings before interest, tax, depreciation and amortisation by 2009-10. The margin rose to 12 per cent in the fourth quarter, from 10 per cent in the previous three months.

One issue that is unlikely to be resolved before Sir Christopher’s departure from BT is the “crown guarantee” that supposedly means the government underwrites the company’s pension scheme.

It is the UK’s largest defined benefit scheme and BT maintains the guarantee covers 75 per cent of its liabilities.

The Department of Trade and Industry has this month obtained legal advice and one government insider said the scope of the guarantee may have to be decided by the courts.

Perhaps unhelpfully, Mr Bolton claimed in his tribute to Sir Christopher that the BT chairman had “some reservations” about selling the company’s mobile business, which has gone on to become O2.

BT’s European peers have relied on their mobile arms for revenue growth.

But the sale of BT’s mobile business was agreed before Sir Christopher’s arrival and he said yesterday it was “on balance the right thing to do”.

Copyright The Financial Times Limited 2017. All rights reserved.
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