Reply to post: Re: Realism is hard?

That thing we do in the UK? Should be ILLEGAL in the US, moans ex-State monopoly BT

Anonymous Coward
Anonymous Coward

Re: Realism is hard?

BT Global Services is about 40% of BT Revenue and less than half of GS revenue is earned outside the UK. BT effectively makes no EBITDA outside the UK, as the GS EBITDA number is the same as the contribution from GS UK (albeit with some entities contributing positively, and others negatively). They may be able to deliver, but with no return, how long will the shareholders tolerate this?

BT's business outside the UK is smaller than the business of both AT&T and Verizon outside the US. Overall, of course, BT is tiny compared to either of them. The capex required to build a global network is astonishing - you need enormous cash flow. BT will never succeed without an ability to create bigger cash flow at home.

BT's complaint is based on an untruth. In the US, both AT&T and Verizon have to procure "last mile" access from each other, just as BT do. There are other providers. The market is competitive. As BT have failed to invest in the US (unlike Verizon and AT&T in the UK), BT is obliged to buy "value-added" services - not just last mile. These services are priced accordingly as these are the retail services the US carriers have invested in for their own customers. This failure to invest is BT's decision, and they are wrong to blame others.

Finally, within BT GS UK, contracts are often written at negative EBITDA because it is "good for the firm" as, ultimately, Openreach will benefit. Ofcom need to act and a split seems the most logical approach.

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Biting the hand that feeds IT © 1998–2021