Slide 1 - BT Group by wuyunyi


									Next Generation
from connectivity to services
Ian Livingston
CEO BT Retail
Cautionary Statement

Forward-looking statements – caution advised
Certain statements in this presentation are forward-looking and are made in reliance on
the safe harbour provisions of the US Private Securities Litigation Reform Act of 1995.
These statements include, without limitation, those concerning: expectations regarding
cost transformation and efficiencies; delivery of new products and services; and
anticipated revenues from new services.
Although BT believes that the expectations reflected in these forward-looking statements
are reasonable, it can give no assurance that these expectations will prove to have been
correct. Because these statements involve risks and uncertainties, actual results may
differ materially from those expressed or implied by these forward-looking statements.
Factors that could cause differences between actual results and those implied by the
forward looking statements include, but are not limited to: material adverse changes in
economic conditions in the markets served by BT; future regulatory actions and
conditions in BT’s operating areas, including competition from others; selection by BT
and its lines of business of the appropriate trading and marketing models for its products
and services; delivery of BT’s 21st Century Network; technological innovations, including
the cost of developing new products, networks and solutions and the need to increase
expenditures for improving the quality of service; prolonged adverse weather conditions
resulting in a material increase in overtime, staff or other costs; developments in the
convergence of technologies; and the anticipated benefits and advantages of new
technologies, products and services, including broadband and other new wave initiatives,
not being realised. BT undertakes no obligation to update any forward-looking statements
whether as a result of new information, future events or otherwise.
What you say

                       under pressure
Prices coming down

                                   LLU intensifies
                                fight for Broadband
 New entrants will
 take market share

                     The future is VoIP
Next Generation Consumer

• A range of innovative communication services
• Compete in adjacent and new markets
• Focus on enhancing margins
• Sustained cost transformation
• Built on strong current performance
• Deliver value to customers and shareholders
Today’s Agenda

• Background
• Access In and Out of Home
• Value Adding Services
  –   Communications
  –   Entertainment
  –   Life Management
  –   IT Support
• From Households to Individuals
• Cost Transformation
• Summary
     BT Retail - 40% of BT Group revenue

Group Revenue - H1 2005/06
BT Retail
   A return to profit growth                 In the future…

   • Profit growth for first time            • Improve ARPU
     in six quarters                         • Improve Gross Margin
   %   10     EBITDA growth                  • Deliver cost efficiency
                                               of £400-500m over
                                               three years
                                             • Continue to invest in Next
                                               Generation Services



       -25   Q1   Q2   Q3   Q4   Q1   Q2
                  2004/5         2005/6

   • Forecast to deliver full year profit growth
BT Retail
   Defending traditional, growing new wave

          Growth in revenue                      Over £1bn New Wave
      market share - Calls and Lines              Revenue per annum
      Source: Ofcom
                                       £m 1200

      1.0%                                1000
% Change
            0                              700
  share                                    600
      -1.0%                                400

                                                    Moving Annual Total
Consumer business has turned around

           EBITDA growth      • Consumer £5bn revenue
                              • 14m Calls and Lines
                                (‘active’) customers
 10                           • Market leader in broadband
                              • 200m customer contacts
                                a year
                              • Improving gross margin
                                and lower SG & A

                              • Household ARPU stabilising
                                at £253pa
                              • 65% of revenue contracted
       Q1 Q2 Q3 Q4 Q1 Q2
           2004      2005

       Moving Annual Total
     Consumer Business Unit
   Providing value to customers

               Cost of a 20 minute
              off-peak National Call

                                         BT has saved
        120                             UK consumers
                                       £1.1bn since 1995


               1995     2000    2005
     Lowest voice prices in the G7 countries

                     Annual telephone bill for an
                    average residential customer




             UK     Germany USA               Italy   France Canada   Japan

Data Source: Teligen T-Basket, August 2005.
       Customers trust BT

       Customers are positive                         Customers trust BT to deliver
             about BT                                  communications services




      Care about needs

  0     10      20        30           40   50   60
              % strongly agree
                (Base: BT customers)

Source – Millward Brown
Move from connectivity to services

• Regulated                 • Liberalised

• Telco-specific            • Entrants from other markets

• 24m households            • 60m individuals in 24m households

• In home                   • In home / out of home

• Standard service to all   • Differentiated by service

• Product push              • Customer pull

• Mass market               • Targeted to individual

…committed to but not limited by access
 Making life simpler and better for customers

We want to be known for               What we will do
     Helping our customers thrive         Broadband in and out of home
          in a changing world
                                           Integrated communications
                                                   behind VoIP
What we do
   Provide simple to use, converged           Value added services
       services that help people
     communicate, be entertained
     and manage their lives in and        Customer not product focused
            out of the home
                                              Radical approach to
How we measure success                        cost transformation

 ARPU, Active Customers, Attachment
  Rates, Advocacy, PROFITABILITY            Create a retailing culture
Access In & Out of Home
      Committed to competitive broadband access

     Price Promise                             National              WiFi
          No increase                         Up to 8Mb in the   Converged with
          for 3 years*                        home starting in    other services
                                                Spring 2006
                                            (and more to come)

*on standard prices subject to regulatory
requirements and tax changes
…benefits the customer

           Retention                    Distribution

           Upsell New                    Low Cost
            Services                      Service


                                                       …and BT
Extending out of home WiFi coverage

                      • BT Openzone first to market,
                       launched August 2002

                      • Biggest footprint in the UK
                       with approx 8,000 hotspots

                      • Over 30,000 hotspots globally

                      • Wireless Cities
                       - Westminster, Cardiff, Glasgow

                      • 431% growth in minutes year
                       on year
Driving WiFi usage

  Extending         Extending       Extending
 opportunities    opportunities    opportunities
   to work         to talk with       to play

                 BT Communicator
Gavin Patterson
Group MD Consumer
Not forgetting traditional voice

  Driving BT    • 2.2m sign-ups and growing
   Privacy      • Customer need - the menace of unwanted calls

                • Automatic discount to most called numbers
  & Family      • Customer satisfaction and cost saving

 Mobile Costs   • 25% discount on calls to mobiles

                • Text to and from fixed lines / mobiles
  BT Text
                • Text to speech conversion
                • Inclusive text bundles
BT’s VOIP offer is strong today

Broadband Talk
• Make and receive calls over the
  internet using a conventional phone

Key Features
 Second line into home
 £2 for evening / weekend calls
 Free with BT Broadband Options 3 and 4
 £7 for anytime calls
 Service available for non-BT Broadband customers
BT’s VOIP offer is strong today

BT Communicator
• PC based internet telephony

                                                   Free calls at Christmas
Price Comparison                                     to 30 international
 PC to PC calls free, anywhere                         destinations
 Currently less than half the price of
  Skype on international routes
 Cheaper than Skype
     Calls to 4 main mobile companies
     Calls to 0845 / 0870
     Calls to landlines - evenings and weekends
      BT is committed to giving our customers great
      value for money
                Cost of 10min evening           Cost of 5min evening
                 call to UK landline *        call to Vodafone mobile **





                     Skype         BT               Skype           BT

    • Cheaper than Skype on 50 main international routes
    • 1.25p per minute for 25 main international routes       }     To launch
                                                                     Feb 1st
*Local / National, Before Jan 06                  **Before Jan 06
Next generation voice services

Personalised, network                    Richer communication
services in real time
                                         • A new standard in
• Directory, e-wallet                      voice and video
• Intelligent presence                   • IM, email, SMS

• Converged voicemail                    • High definition sound

High bandwidth in and                    Devices
out of the home
                                         • Work on any device
• WiFi technology                          anywhere
  beats 3G
                                         • Bundled with services
• Voice and

...a richer and tailored experience in and out of the home
A clear pipeline of market leading service launches

 Q4 05/06 Single     Q1 06/07 High      Q3 06/07 Integrated
  Voice Service     Definition Sound     Communications
• Merge BT                             • Single secure identity
  Communicator                         • One number for life
  and BT Talk
                                       • Network-based
• Single sign-in                         synchronised
• Personal Number                        address book
• No need to be a                      • Intelligent presence
  BT customer                          • Choose how to
• E-wallet                               be contacted
• Basic video                          • Access through any
                                         device, anywhere
                                       • Converged voicemail

Underpinned by aggressive pricing and bundling
Devices enhance the experience
Subscription and pre-pay options

      Mobile            See your loved      Broadband
    experience         ones – be closer     value and
    in home as             to them        services out of
     standard                                 home

    New DECT                Video              WiFi
     Phones                Phones            Phones
     Ongoing             Spring 2006        Autumn 06

Near 50% share of existing in-home telephony device market
Mobility is key - BT Fusion only the start

• The proposition will continue
  to strengthen:
   – V3 Razr in January
   – Bigger minute bundles in Q4

• Broadband and Fusion bundle

• Broadband range of WiFi phones
   – Samsung, LG, Motorola and Nokia
   – Available from Summer 06/07

• New range of mobile services
Be Entertained
Next Generation TV launches in Autumn 06
Multi-channel TV and Personal Video Recorder

Instant Entertainment        Communication Services
on demand                    via digital multi-channel TV

  •   Catch-up TV             • Video telephony
  •   Movies                  • Voice over IP
  •   TV archives             • Instant messaging
  •   Music

Interactive services         Flexible payment options

  •   Viewer Participation    • No mandatory
  •   Shopping                  subscriptions;
  •   Online Games            • Pay-per-view options
  •   Community Services      • Broadcast pay channels
  •   Education                 via Conditional Access
We have announced our first content partners

                  …with many more to come
Strong relationships in gaming

    Driving            Wifi-enabling          Working with
  Broadband             Nintendo                  Sony
 with Microsoft

• BT Broadband       • Free on-line gaming   • Improving the
  bundled in Xbox                              online gaming
  360 from January   • In home / Out of        experience
• Joint marketing                            • Joint marketing
  activity           • Extending WiFi          activity

  …providing margin and retention opportunities
Customising music to your taste

Driving Broadband   Personalised radio    Enhancing music
    with iTunes      with Launchcast          in 2006
    Partnership            Plus

 Digital Music      • December launch    • Launch music
                      High quality         download service
                      music video        • Launch pod-
                      streaming            casting service

 …providing margin and retention opportunities
Manage ‘Life’
Customers trust us for protection and security

             Me and       My Valuables
            My Family

                    My PC and

 …providing margin and retention opportunities
Tackling what matters to customers

                           We have tackled:
                           • BT Privacy
                           • Email AddressGuard
   Me and                  • Anti-spam & pop-up blockers
  My Family
                           Family internet use
                           Personal ID
                           • Anti-Phishing – 1st in UK
                           • Anti-Spyware

                           We will launch in Q4:
                           BT Identity Protection
                           • DIY service, advice and
                             guidance, bundled with
                           • Personalised help and support,
                             subscription service
Stronger protection for devices

                            We already protect:
                            Against viruses
                            • In emails
                            • On your PC (anti-virus and firewall)

                            We will launch in Q4:
                            BT Protect
                            • One stop shop for protection
                            • Upgraded security pack
       My PC and                  – Anti-virus and firewall from
                                    single source
        Devices             • A simpler experience
                                  – Auto install
                                  – Dashboard
                                  – Auto updates
Protecting and sharing precious assets

                            We already protect:
                            Digital assets
                            • Unlimited online photo storage
                            Homes via BT Redcare
                            Cars via BT Trackit
             My Valuables
                            We are launching in Q4:
                            BT Digital Vault
                            • All digital content and details
                            • Automatically backed up

                            We are developing
                            BT Digital Vault Plus
                            • Access from anywhere
                            • Ability to share
                            In home and remote monitoring
                            Device / utility monitoring
Support drives margin, retention and
cost reduction

                  • Advice on all home networking issues
   Premium IT     • Business IT Support manager - 3k sales a week
    help desk
                  • Subscription service, expand in Q4

                  • Reach into the customers home and solve issues
    Hubs will
 include remote   • Software upgrades and device support
   diagnostics    • Reduce cost to serve
24m households,
 60m individuals
From 24m households to 60m individuals

     Data gives us insight              Market to individuals

…Into communities                     • Single view of customer
    • ‘Most connected’ customers -        • product ownership and
      8% of base talk to 40%                usage
      regularly                           • demographics
    • Key influencers of churn            • payment and debt
      and ARPU                            • customer experience
…And location                             • Updated in Real Time
    • Best movers data in the         • Unique identifier in all channels

• Retention and share of wallet      • Maximise ARPU
• Specific proposition development   • Reduce Cost To Serve
• Customer experience                • Increase Effectiveness
Segmentation demonstrates opportunity
and needs
                Annual Communications and
                   Entertainment Spend

        Total   £500                  Total   £1200
        BT      £250                  BT      £240

    Connected to loved ones     Intensive communicators
     Nervous of technology          Independent lives
      Need hand holding         High service expectations
             Loyal                   Value over price
Ian Livingston
CEO BT Retail
Cost Transformation
Cost Transformation

 BT Retail goal - £400-500m over three years

Good for customers, good for cost

 Get the experience right first time

 Eradicating unnecessary contact
                                       }   • 30% - 40% call
                                             volume reduction

                                           • 5m plus e-billers
 Growing on-line sales and service         • 3m plus paperless

 Shift from billing to payment             • 70% auto payment

                                       …and much more
Consumer revenues move from traditional calls
and access to new services
BT- beyond the quad play

           Voice           Broadband


            TV               Mobile

…but it is about making customers lives simpler
and better
Next Generation Consumer

       Strong performance today

       Simpler and better life

         Innovation and financial discipline

           Value for customers and shareholders
Next Generation
Thank you

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