So what's the future of Future BT?

The jury's still out. And that's the problem

  • alert
  • submit to reddit

Reducing security risks from open source software

The multiplicity of announcements from BT yesterday still has analysts, investors and reporters scratching their heads over what the future holds. Right now, "future" is a big word for the lumbering telecoms giant.

The announcement proper at BT's headquarters yesterday was held in a futuristically decorated part of the building - lots of swirls and curves and minimalist plastic in soft blues. And of course, the old-style BT - once all the mobile operators have been pooled into BT Wireless and demerged - is called Future BT.

But what is the future of the two new BTs? Will BT Wireless, free from the corporate shackles of the giant's other businesses, take off, capitalising on the booming mobile market and become a powerful force within a few years?

Or will it, like some have suggested, be weighed down by 3G licence debt and ripe for takeover from other companies hungry to get hold of its valuable stakes in big mobile operators in the UK, Germany, Ireland and the Netherlands?

Back to the Future

Likewise Future BT. The company basically consists of the fixed-line network it inherited when privatised and the Internet services that ride on top of it. Will Future BT - as CEO Sir Peter Bonfield claimed yesterday - exploit broadband access and expand into more businesses and home as the Internet becomes ubiquitous? Or will it find its market share dwindle over the years, suffer customer disillusionment and end up being carved up by stronger and nimbler competitors?

You'll find articles supporting all aspects of this crystal-ball gazing in the next few days and months. And that is precisely the most disturbing aspect. People are simply unsure whether BT is doing the right thing. The board told reporters it was chuffed Standard & Poor had only downgraded its rating from A to A minus - that meant it wouldn't pick up extra interest charges on its huge debt. Today, Moody's shifted BT onto a BBB rating - immediately putting £30 million on its interest bill.

The company could have been split in 20 different ways - each with its advantages and disadvantages. It has mooted a range of possible approaches over the years but in the end went for putting all the troublesome mobile businesses under one umbrella, spinning it off and leaving the rest as is. The BT board has never really understood the mobile business anyway.

Yell, whose future BT has been fretting about for over a year, is to be sold. Either that or demerged. It doesn't know which. But it won't come into the new super Future BT that's for sure. Not exactly decisive behaviour from the people that are trying to make a clean sweep of things.

They don't know what to do with Concert either. But then Concert can't be treated as badly as Yell or AT&T will get angry and you don't want to mess with AT&T. And so Concert sits at the back of the class, making itself a nuisance and spunking a quarter of a million pounds a quarter.

Uncertainty breeds uncertainty

Why didn't BT split off its Internet businesses? Because then the board wouldn't have anything to do but sit on its inherited and disintegrating network - like a latter-day Miss Havisham.

This does not bode well for the people working for BT Openworld or BT Ignite because the board hasn't got a clue about the Internet either. With the troublesome wireless boys out the picture, Bonfield, Bland and Hampton can concentrate on imposing their out-dated Web beliefs.

It seems unlikely that BT Wireless will find itself usurped by a larger and richer telecoms company. Would the City allow anyone to raise that sort of money for the next few years, what with 3G around the corner? Probably not. And one thing everyone should remember is that Hans Snook reckoned when 3G actually took off, people would think the huge prices paid for its licences would be cheap. Now, if only the head of BT Wireless Peter Erskin could get Hans to fill the vacant post of BT Wireless chairman.

Future BT is going to have to come up with something spectacular. The company is just too huge to rely on Internet services to keep it rolling. Yes, it has good, solid revenues from fixed-line business. It's worth a lot of money. But the hold it has over the network is being gradually removed. FRIACO and LLU may have been false starts but there can be no doubt that just because the company is cutting loose its wireless arm that Oftel will suddenly decide BT can go back to jealously guarding its property.

BT will see its market share get smaller and smaller every year. And it just isn't exciting to back a company that is protecting its corner rather than taking on all-comers. And never underestimate the traditional British support for the underdog.

We haven't even mentioned what the small-time shareholders in BT - which account for 20 per cent of all shares - will think of all this. Many have stuck with BT since it was first privatised 17 years ago.

The last year has seen the value of those shares drop by 70 per cent. This year and next they don't even get a dividend. And then they are asked to put more money into the company in the form of a rights issue. How many Smiths and Richardsons will be thinking "good money after bad" this weekend?

If BT loses it core supporters, people that never dabble in shares day in day out to make a few pence here and a few there, it loses its stability and becomes just another telecoms company. And it simply can't afford to do that at the moment.

We cheekily asked the BT triumvirate yesterday if it had it own estimate as to when the share price would finally start moving up. After a lengthy pause and a brief quip, Sir Christopher responded precisely. "No." ®

Related Stories

Why BT is unbelievably Net stupid
OFT rules on BT's Yellow Pages business
BT shake-up to save business (touch wood)
BT unveils first-ever loss
What's in BT's bargain bin?
'I'm not a quitter and I love my critics' - BT's Bonfield

Eight steps to building an HP BladeSystem

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
prev story


Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.