What’s Going On At BT?
BT have had a tumultuous start to 2017 with a number of high profile faux pas coming in short succession.
10:57 21 August 2017
BT have had a tumultuous start to 2017 with a number of high profile faux pas coming in short succession. Being fined by OFCOM, price increases, the Italian accounting scandal that hit share prices, issues with their “gold plated” benefits / pension scheme and hitting ASA problems with their Ryan Reynolds advertisement claiming the strongest WiFi signal and better WiFi coverage meant the ad was withdrawn after being classified as being misleading (see below).
However it’s not all doom and gloom.
BT had not tested hubs from all the major broadband providers in the ‘real homes’ tests. However, because the tests performed in laboratory conditions were suitably robust, we considered that it was sufficient for BT to test only the three top-performing hubs in order to demonstrate that the same results could be achieved in a representative real home setting. We therefore considered the evidence was sufficient to demonstrate that the BT Smart Hub had the UK’s most powerful wi-fi signal compared to major broadband providers. However, it was not sufficient to substantiate the claim as it would be understood by consumers, as a comparison with the whole market.
In conclusion, consumers would understand the ads to mean that the BT Smart Hub provided a stronger signal – that is, one that could reach a greater distance within users’ homes – than routers from any other broadband provider. We acknowledged that the evidence substantiated that the Smart Hub’s signal reached a greater distance than routers from other major broadband providers. However, we did not consider the qualifications that the claims only related to a comparison to major broadband providers was sufficiently prominent, and BT had not provided evidence in relation to the whole market. For those reasons we concluded that the claims “UK’s most powerful wi-fi signal” and “Our hub gives you better wi-fi coverage” were misleading.”
This hasn’t hit consumer confidence in BT however, with Q2 results released recently showing that their retail broadband subscribers now totals 9,286,000 which is a net gain of 19,000 subscribers. This number includes 5.1 million fibre broadband (FTTC or FTTP) connections.
Financial results are down across the board with the exception of net debt which has improved slightly and is largely down to one off charges incurred due to issues earlier in the year.
Financial Highlights from BT’s Quarterly Report
* BT Groups’ quarterly revenue = £5,849m (down from £6,122m in Q1 2017 calendar)
* BT Group’s reported profits before tax = £418m (down from £440m)
* BT Group’s total net debt = £8,810m (down from £8,932m)
* BT Wholesale’s quarterly operating profit = £98m (down from £141m)
* Openreach’s quarterly operating profit = £271m (down from £340m)
* Openreach’s quarterly capital expenditure = £390m (down from £470m)
Gavin Patterson, CEO of BT Group, said:
“BT has delivered an encouraging performance in the first quarter of the year. We’ve made good progress in our key areas of strategic focus: deliver great customer experience, invest for growth, and transform our costs. In particular, I’d highlight the growth achieved by our consumer facing businesses, helped by mobile.
BT, with Openreach, is well placed to support the roll out of FTTP in the UK, and we’re consulting with Ofcom, Government and other communications providers to build the investment case to achieve this outcome.
Our new Consumer business will operate our three distinct brands; BT, EE and Plusnet; to leverage our position as the largest and only fully converged player in the market, spanning fixed and mobile networks, consumer products and services as well as content.
We will continue to simplify and streamline the business and rationalise our costs as demonstrated by our ongoing performance transformation programme. Our businesses are leaders in their core segments and as we drive the business forward I am confident in the outlook for our Company.”
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