"New Wave" Services Boost BT Results

The British telecom company credits its revenue growth to IT services and broadband, but lack of a mobile-phone business could be a handicap

IT services, broadband and mobility are an increasingly important part of BT's business, its annual results have revealed.

The company said 'new wave' business such as networked IT services and broadband now account for a third of its total revenue.

The company reported revenues of £19.5bn for the year, of which £6.3bn was new wave revenue. The company said that as of 31 March it had 7.9 million broadband users.

BT chief executive Ben Verwaayen said BT has changed dramatically since 2002 and that the pace of change is picking up.

For the fourth quarter ended 31 March, BT's new wave businesses contributed £1.9bn in revenue, 28 per cent higher than last year.

Networked IT services revenue grew by 22 per cent to £1.2bn, broadband revenue increased by 44 per cent to £421m and mobility revenue increased by 41 per cent to £82m. BT said it racked up £1.1bn in IT services contract wins in the fourth quarter and the value of total orders achieved over the last twelve months was £5.4bn.

But revenue from the group's traditional businesses declined by three per cent over the year - down from £13.9bn in 2005 to £13.2bn in 2006.

Mike Cansfield, head of telecoms strategy at analyst Ovum, said the results show that IT services is now BT's "primary growth engine".

But the analyst warned about the company's lack of a major mobile business and said in a statement: "In our view its lack of a mobile business is a significant inhibitor to how far the business can grow in the long term.

"Convergence (in all its different forms) is a big driver in the industry at the moment, of which fixed-mobile convergence (and indeed fixed-mobile substitution) is a part... Without a mobile business BT has little to converge."


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