Getting your strategy right is easier said than done: just ask BT. A regular column on the information industries
| Date | 10 September 2018 |
| Pages | 609-611 |
| DOI | https://doi.org/10.1108/DPRG-09-2018-063 |
| Published date | 10 September 2018 |
| Author | Jason Whalley,Peter Curwen |
| Subject Matter | Information & knowledge management,Information management & governance,Information policy |
Rearview
Getting your strategy right is easier said than
done: just ask BT
A regular column on the information industries
Jason Whalley and Peter Curwen
In the aftermath of 3G
licencing around the turn of
the millennium, UK fixed-wire
incumbent BT exited the mobile
sector and sought to reinvent itself
as a broadband focussed operator.
Such a reinvention recognised the
declining opportunities associated
with voice telephony and the
opportunities emerging from the
internet. Initially, this reinvention
would see BT use its existing
operations, which were significant if
unexciting, to finance
improvements in its infrastructure
that would enhance its
competitiveness. At the same time,
BT invested in new businesses that
it felt were more attractive than
voice telephony.
After investing in a variety of online
businesses without great success,
BT shifted its focus and started to
acquire sports rights. A simple
logic underpinned the shift of BT
towards this type of content: not
only would consumers want to
watch the sports that BT had
acquired but bundling different
products together would also
encourage the adoption of the
company’s broadband-related
services. Over time, it was argued
that this strategy would shift the
revenue base of BT, moving it away
from existing services such as
voice telephony towards new areas
such as broadband and content.
Looking at the financial results of BT,
a plausible case can be madethat
the strategy has been a success.
Those parts of the company selling
broadband or internet productsto
households or businesseshave seen
their financial performanceimprove.
For example, the earnings before
interest, tax, depreciationand
amortisation (EBITDA) for BT
consumer increased between 2012
and 2017. The same was also true for
BT business. Moreover, BT boasted in
its 2017 annual report that it was the
UK’s largest fixed-wire broadband
provider with more than nine million
customers and that daily viewing
figures for BT sport had increased by
more than 10 per cent. So, Why have
pre-tax profits reached a plateau?
Why has the share price collapsed?
and Why has Gavin Patterson, the
CEO, been sacked?
A “simple” answer to these questions
is that BT is currently facing too many
simultaneous challenges.Collectively,
these challenges, outlinedbelow,
taxed the ability of managers to
implement the transformationof BT
and raised questions about their
ability.
How to tackle the BT pensionplan
deficit is a long-standing challenge,
with BT in recent years increasing its
contributions while indicatingits
intention to reform the schemein
its favour –a proposal that was
vehemently opposed by the
Jason Whalley and Peter Curwen
are Professors at Northumbria
University, Newcastle upon Tyne,
UK.
DOI 10.1108/DPRG-09-2018-063 VOL. 20 NO. 6 2018, pp. 609-611, ©Emerald Publishing Limited, ISSN 2398-5038 jDIGITAL POLICY, REGULATION AND GOVERNANCE jPAGE 609
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