"BT has presented solid results both financially and operationally in terms of subscribers. Despite its lack of content in comparison to Sky and Virgin, net broadband additions continued strongly in 4Q, signalling consumers' preference for a strong bundle of services, and how much BT's fibre offering is proving to be a differentiator. However, increasing pricing pressure from rivals saw an accelerated decline in fixed voice subscribers in 4Q. Although, BT is sticking to its guns and not looking to follow suit, which makes sense given that it has tended to differentiate more on quality rather than on price.
"BT saw continued strong growth in Infinity and Vision (IPTV) subscribers. With its planned update to Vision 2.0 being implemented and the launch of YouView expected this summer, BT is ensuring that its IPTV service and overall bundled broadband plus content offering remains a draw for customers. This will really help differentiate its TV service versus Sky and Virgin, which until now it has struggled to do.
"BT Global Services (BTGS)'s margin is still clearly a worry for the company, with finance director Tony Chanmugam claiming that operating cash flow for the year of circa £200 million was 'unacceptable' for a division with revenues of close to £8 billion. Legacy network migration is progressing slower than expected, while the European market and select verticals such as banking remain weak. Despite that, the order book remains strong, with a large number of smaller (and one would imagine less risky) deals signed in 4Q. Furthermore, the addition of around 450 new hires planned in BT's new target regions of Asia PAC, Latin America, and the Middle East will help it to capitalise on opportunities in these regions."
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