BT Retail talks down costs, talks up revenues

Danon takes us from Sumo to Samurai

By James Watson, 4th December 2001

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BT Retail CEO Pierre Danon today outlined his plans to cut massive costs from the company's bottom line, defending its core revenues and delivering at least three per cent annual revenue growth over the next three years.

BT Retail aims to grow revenues in two areas; extending existing business through new initiatives - bringing in £825 million; and delivering a brand extension strategy (encompassing entertainment, digital business and CRM) bringing in £700 million over three years.

The new initiatives see the company paying more attention to mobile solutions, wireless LANs, conferencing kit and the like. Most initiatives are already in place, but are expected to grow strongly, fuelling revenue growth beyond the company's core business of voice and Internet access. (Part of this was seen in October, when it tied up with a clutch of IT heavyweights including Cisco, Dell and Microsoft.)

Cost cuts

In June, Danon first told the market of his plan to weed out £850 million in operating costs. This met with a cool reception at the time. He said at then that he would deliver £240 million in savings this year and a further £610 million at some unspecified point in the future.

The £240 million for this year has now swelled to £268 million and next year's target is set at £239 million (for now), while the overall figure is pegged at £650 million.

This year's figures has been achieved in a variety of ways: reducing cost of failure (£43 million); optimising transaction economics (£30 million); and a variety of operational improvements (£195 million).

Part of the three-year plan includes 13,000 job cuts (about 19 per cent of the full workforce). 8,000 people have already been removed, with the remaining 5,000 to be removed by March 2003.

This will transform the company from a lumbering Sumo wrestler to an aggressive Samurai, in Danon's words. ®