BT Group offers local and long-distance phone service and provides internet access and other data and IT services. The UK-based company operates through several divisions: corporate clients are served through its BT Global Services unit, BT Business provides communications and IT services in the UK and the Republic of Ireland, and BT Consumer offers consumer fixed-voice and broadband services in the UK. The BT Wholesale and Openreach divisions are devoted to the broadband and local network needs of other carriers. BT Group, which traces its history back to 1879, introduced its distinctive red phone booths around London and other service areas in 1936. The company acquired mobile network EE for £12.5 billion in 2016.
BT Global Services, the group's enterprise telecommunications division, is its largest segment by sales, accounting for about 38% of revenue in 2015 (ended March). It provides voice and data communications, as well as managed network and IT services to corporate and public sector customers in more than 170 countries; the UK government is the company's largest client. BT Global Services also operates customer contact and data centers, and offers customer relationship management and managed network security.
BT Business serves small and medium-sized enterprises (SMEs) in fixed-voice and data; mobility; and IT services. The company has a market share of around 30% in fixed-voice and data but just 1% in mobility and 6% in IT services. The segment accounts for 15% of the BT Group's revenue.
BT Consumer provides broadband, TV, sports channels, and mobile services. The unit also sells services through its Plusnet brand. The segment generates about a quarter of revenue.
BT Wholesale provides network services to more than 1,400 communications service providers in the UK. It operates the only network that covers the entire country, and many competitors pay to use its network to enable their own services. BT Wholesale manages the network infrastructure for Virgin Media and KCOM, while O2 and Vodafone use its fixed-line network for their business customers. It has about 12% of the BT Group's sales.
Openreach is the group's smallest segment with 11% of sales. It was created in 2006 as part of a settlement with regulatory agency Ofcom to ensure that other companies have full access to BT's network. About 500 communications service providers, including BT divisions, rely on Openreach for network communications.
The UK is London-based BT Group's largest market, accounting for more than three-quarters of its annual sales. Key European markets for the company include Italy, Germany, and Spain. In North America, BT serves customers from offices in 25 cities. The firm also has a presence in high-growth regions in Asia Pacific, Latin America, the Middle East, and Africa. Overall, BT Group has operations in about 170 countries.
BT Group's revenue declined 2% in 2015 (ended March) versus the prior year to £17.8 billion. BT Global's revenue dropped 7% because of the negative impact from foreign exchange and lower transit revenue. BT Business underlying revenue, excluding transit, was down with lower call and line volumes as customers moved to broadband and IP services. BT Wholesale underlying revenue fell 7%.
Net income grew 15% in 2015 versus 2014, while cash flow was flat year-to-year.
BT Group is looking to spruce up its infrastructure and making improvements to its UK broadband network. The network is more resilient and has the capacity to comfortably accommodate increases in traffic. With its mobile virtual network operator (MVNO) partner EE, BT Group is developing new mobile services that enable BT Consumer's jump back into mobile.
Mergers and Acquisitions
In early 2016, BT Group acquired major mobile network EE. The £12.5 billion mega-deal is the latest in the UK's 'quad-play' wars, a tussle between mdia communications companies to offer triple-play -- television, broadband and telephone -- plus mobile. The acquisition of EE adds the mobile segment to BT's pre-existing triple-play offering, and has the potential to alter to UK's telecommunications landscape and put pressure on smaller rivals.