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BT plans expansion of superfast broadband

BT is set to use its full-year results on Thursday to outline an expansion of its superfast broadband network.

Ian Livingston, chief executive, is expected to say the UK’s leading fixed-line phone company will expand the planned reach of the network from 40 per cent of homes to 66 per cent.

The proposal is expected to increase the cost of the infrastructure beyond the existing budget of £1.5bn ($2.2bn).

But the move underlines how Mr Livingston regards the superfast broadband network as one of BT’s key assets, and a source of potential growth. BT declined to comment.

The original plan, first outlined in 2008, was to run the infrastructure past 40 per cent of homes by March 2013. In December, BT said it would complete the roll-out by mid-2012.

But politicians are keen to see BT extend the infrastructure, and the company is competing with Virgin Media, the cable television group that also has a high-speed broadband network.

In January, when BT began selling high-speed internet access to consumers, it outlined an aggressive pricing strategy in an effort to increase its market share.

BT’s broadband market share is smaller than many of Europe’s former fixed-line phone monopolies because competition with rivals is fierce.

The plan to run the network past 66 per cent of homes should also increase chances of striking wholesale deals with competitors.

Analysts said BT could struggle to make a return on its investment unless British Sky Broadcasting and TalkTalk, the telecoms company, sign deals to rent capacity on the infrastructure.

BT is confident that large numbers of consumers will want high-speed internet access, partly because of the rising popularity of high-definition television and interactive gaming.

The company is also likely to use its results to outline an aggressive pricing strategy for watching live Premiership football on BT Vision, its fledgling TV service.

It is looking to undercut BSkyB on the cost of watching live matches from next season. The move is an important step towards increasing BT Vision’s customer base, which stood at 451,000 at December 31.

BT and Virgin have fought to break BSkyB’s hold on premium TV content, including live Premiership football and movies.

Results for 2009-10 are expected to show Mr Livingston has stabilised the company after it fell in 2008-09 to its second full-year pre-tax loss since privatisation.

The loss was caused by severe problems at BT Global Services, the unit that serves the telecoms needs of multinationals.

BT Global Services had to abandon over-optimistic assumptions about the profitability of some of its contracts, which prompted BT to take large charges against its profit in 2008-09.

Jeff Kelly, who was appointed head of the unit in January, is expected to outline plans to improve its profitability. He is also likely to highlight opportunities for growth in Asia.

Over the past year, much of Mr Livingston’s efforts have been focused on cost-cutting. Robin Bienenstock, analyst at Bernstein, said BT was likely to outline further cost-cutting, but cautioned against large scale job cuts because of the uncertain political environment.

Источник: Financial Times

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