Oh yeah .....
Outsourcing not working and losing money .... colour me surprised.
Ah well, another £3.00 per month on my broadband coming up soon!
BT's problem child Global Services once again dragged sales down, this time by three per cent in the third quarter of its financial year to £5.97bn. The UK telco fingered its troubled outsourcing division as the "main contributor" to revenue decline in the three months to December 31, 2017, with its sales in the quarter …
Outsourcing not working and losing money .... colour me surprised.
Much as I'd like BTGS to lose money, the underlying problem (other than the Italian Job) has been restructuring costs incurred because BTGS makes money, just not enough of it for investors. EBITDA for GS was within a spit of half a billion quid for the last full year, although that soon shrunk to £56m after taking out financing costs, most of which will probably be the amortisation of corporate acquisitons. Chances are that £56m was wholly lost in restructuring costs.
But the article is correct, BTGS has ceased to be relevant to BT Group's ambitions. With no growth, and not much profit, and no strategic rationale, they would like to sell it so that it becomes somebody else's problem, but for low margin BPO and ITO, there won't be a queue to buy the business.
If offered cheap enough, somebody will take it off BT's hands. But I anticipate that BT will then be left with a writeoff of several hundred million quid (maybe more) of the goodwill.
yes they have their issues in a competitive market
they have a stupid regulator who chooses the the most stupid awkward regualtions that actually hinder progression like:
insisting on keeping copper instead of allowing it to be replaced by fibre to protect the LLU mob's investment,
forcing the wholesale cost of BB so low no one wants to invest as the risk of low return is too high.
Not insisting VM and altnets also wholesale to encourage demand led installation,
not enforcing standards based fibre installation to ensure we see the same standard of fibre installations across the nation permitting access level competition for all installs not just BT wholesale
many many other reasons too
At least they pay uk taxes and are accountable to uk rules and regs, which is not the case with VM owned by US giant Liberty Media off the back of debt acquired by the smaller cable operators who pay(ed) little to no tax due to paying interest and repayments on previous loans which may now not be in the UK anymore thereby dodging taxes on profits the loan company (LM subsidiary or close related business) may make.
Im not a nationalist, but look behind the screw ups and angst and there are many thousands of highly skilled UK jobs like installations, civils, management etc Surely in a world where our jobs can be offshored next week, we as techies should be encouraging more on shore?
- Insisting on keeping copper isn't a problem. The problem is that the copper isn't backed by anything at the exchange. VDSL over copper can do amazing things, way more than they actually ever achieve, and nobody is dictating what happens past the cabinet.
- Wholesale cost BB? You mean more than just about every developed country while providing much less in return? BT have had DECADES of opportunity to get their costs down by doing the above.
- "Not insisting VM and altnets also wholesale to encourage demand led installation" - given that almost all that consists of is NTL's bankrupt cable business, and Hull's sole ISP, that's not something you can just regulate. If you did, you'd be forcing OpenReach to take it all on, and providing new installs too. Pretty much the bit that's not happening is new installs, VM rarely cover any area at all that isn't already well covered by BT/OR cabling.
- "not enforcing standards based fibre installation to ensure we see the same standard of fibre installations across the nation permitting access level competition for all installs not just BT wholesale" VM is DOCSIS3. BT chose VDSL. Both are well-established standards. Everything else doesn't matter as it's IP transit... the beauty of IP is nobody cares what box is at either end so long as it talks IP. ISPs haven't had to have banks of modems, one per active customer, for decades.
"At least they pay uk taxes and are accountable to uk rules and regs, which is not the case with VM owned by US giant Liberty Media off the back of debt acquired by the smaller cable operators who pay(ed) little to no tax due to paying interest and repayments on previous loans which may now not be in the UK anymore thereby dodging taxes on profits the loan company (LM subsidiary or close related business) may make."
They bought up businesses with the only asset being a cable in the road and enormous debt. Pretty much penalising them because they're not English is about the worst argument you can make (where are all the British-operated companies putting in new connections or buying up the NTL stock? Oh, that's right, nowhere...)
I'm far from a nationalist (I think it's silly to blindly cheerlead for an entire nation just because you were an accident of its geography). But all I see is a shitty long-term, ex-nationalised UK company messing up the entire industry for everyone via monopolistic practices, and the only serious rival being foreign. I know what that tells me about my nation.
And I've dealt with more than enough "highly skilled" installation, civils and management people for BT/OR to know that I'd rather they were on the dole queue and having to prove their utility rather than the shitshow we get at the moment.
You want a fix? Nationalise Openreach. Make the infrastructure government-paid-for, force it to provide a line upon request within a year wherever the person is in the country, charge a standard rate to everyone to cover the long-term costs of everything. ISPs then provide the IP service at the other end. Like it used to be... get a telephone line from a government department, but who you pay for phone calls is up to you.
No need to standardise on one tech. No need to scrap copper. No need to steal the business of the only rival who has their own infrastructure, or pay off their debts for them. Unless, of course, they go somewhere you don't (vanishingly rare) in which case you might want to buy a deal with them rather than them have to buy a deal with you.
And every time you build / repair a road or pavement... put a tube full of fibres along it and a cabinet at every junction point.
Increased internet costs for everyone for 5 years. Then everyone with access to broadband. Then a highly-redundant and high-capacity network to back it all. Then no "separate line rental". Then no BT install farce. Then you can call it a utility like any other.
There is so much wrong in what you wrote there is no point me regurgitating it all.
Just 1 point sticks out slightly more than others though. Re standardised fibre installation, I deliberately never mentioned any technology that should ride over the fibre. Yes VM use docsis for copper but will use RFoG for fibre, this enables the use of cheap repeaters to boost the optical strength rather than having to regenerate the data as is common for other transmissions over fibre. RFoG is used for under sea fibre transmissions for its simplicity and ability to pad out the data regeneration systems thus saving money.
VM’s method is better for TV, BT’s is better for data but costs more to install and maintain. BT’s method doesn’t stop alternate providers grabbing your data from the exchange and using their own backhaul. VM’s method requires more technology to separate the stream typically at a major node of theirs which may be several pops up from the client. If everyone used the same standard fibre install then it’s possible for fttp users to get VM tv over ip just like sky are planning, and creates more compin that space. VM’s way is monopolistic as only VM can run on it. If VM where forced to wholesale maybe they would entertain split in their HO or further in?
BT have a number of issues of their own making. A lot of it stemming from the stupid Openreach/Retail split which has caused more problems than it has solved.
Openreach need to be an entirely separate company, at least then the resellers of their services, including BT retail, could ask them questions on behalf of the customers (or god forbid, the customer could ask Openreach directly) and not fall into the trap of 'unfair access'.
BT Wholesale SIP offering, while sounding a good idea is stuck in the dark ages when it comes to be implemented by BT retail (and unusable by most people). Unless you use a very limited range of phone systems provided by BT on specific versions you have to use a hardware gateway. This gateway only supports ISDN on the customer side. So you have to take your fully IP software based PBX and convert it via you own ISDN gateway to connect to the BT SIP gateway and back to IP. Therefore losing many SIP features, introducing single point of failure and reducing the opportunities for simple troubleshooting. No-one else seems to sell the BT Wholesale SIP option other than BT retail.
I used to know some people in BT's GS and they were being reorganised about every six months. They were always having to reapply for their jobs or were doing competency matching exercises.
This clearly takes time and money and would distract managements attention away from the important things like delivery. It didn't seem to do much for staff morale either.
GS made 11% EBITDA margin on £5.5bn in a competitive market that's better than many Technical Service Providers, take a look at Ericsson.... It does look like the halcyon growth days of outsourcing are over and companies are successfully hammering down contracts every few years. You can't expect GS to make the same revenues as a say EE which doesn't have to bid for its spectrum every few years. I'd say the consumer division was more of an eye opener.
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