bt group plc


bt group plc (formerly known as british telecommunications) which trades as bt (and previously as british telecom) is the privatised former uk state telecommunications operator . it is still the dominant fixed line telecommunications provider in the united kingdom.


bt owns and runs the telephone exchanges, trunk network and local loop connections for the vast majority of british fixed-line telephones. currently bt is responsible for approximately 25 million telephone lines in the uk. bt is still the only uk telecoms operator to have a universal service obligation (uso) which means it must provide a fixed telephone line to any address in the uk. it is also obliged to provide public call boxes.

it is officially designated the dominant operator in british telecommunications market. bt's businesses are operated under special government regulation by the british telecoms regulator ofcom (formerly oftel).

bt group has been organised into four business divisions: bt global services: business services and solutions (formerly bt ignite and bt syntegra) bt retail: retail telecoms to consumers bt wholesale: wholesale telecoms core trunk network bt exact / one it: research and development, and consultancy bt openreach: fenced-off wholesale division, tasked with ensuring that all rival operators have equality of access to bt's own local network.

history of bt

a number of privately owned telegraph companies operated in britain from 1846 onwards. among them were the electric telegraph company, british and irish magnetic telegraph company, british telegraph company, london district telegraph company, and the united kingdom telegraph company

the telegraph act of 1868 passed the control of all these to the newly formed gpo (general post office)'s postal telegraphs department

with the invention of the telephone by alexander graham bell in 1876 the gpo began to provide telephone services from some of its telegraph exchanges. however in 1882 the postmaster-general, henry fawcett started to issue licences to operate a telephone service to private businesses and the telephone system grew under the gpo in some areas and private ownership in others. the gpo's main competitor the national telephone company emerged in this market by absorbing other private telephone companies, prior to its absorption into the gpo in 1912.

the trunk network was unified under gpo control in 1896 and the local distribution network in 1912. a few municipally owned services remained outside of gpo control. these were kingston upon hull, portsmouth and guernsey. hull still retains an independent operator, kingston communications, though it is no longer municipally controlled.

in 1969 the gpo, a government department, became the post office, a nationalised industry separate from government. post office telecommunications was one of the divisions.

formation of british telecom

on 1st july, 1981 post office telecommunications was renamed british telecom and became a state-owned corporation independent of the post office. in 1982 bt's monopoly on telecommunications was broken, with the grant of a licence to mercury communications.


the privatisation took place in 1984, with the sale of 51% of the shares in the company (incorporated in 1984 as british telecommunications plc) to the public in november.

the company changed its trading name to 'bt' in march 31, 1991. the remaining state holdings in the company were sold in 1991 and 1993.

in the 1990s, bt entered the irish telecommunications market through a joint venture with the electricity supply board, the irish state owned power provider. this venture, entitled ocean, found its main success through the launch of ireland's first subscription-free dial-up isp, oceanfree.net. as a telecoms company it found much less success, mainly targeting corporate customers. bt acquired 100% of this venture in 1999.

in 2000, bt acquired esat telecom group plc, and all its subsidiary companies, and ireland on line. it also purchased telenor's minority shareholding in esat digifone. the esat telecom group was split in two: the landline and internet operations were combined with ocean and became part of bt ignite. esat group was renamed esat bt in july 2002, and eventually bt ireland in april 2005. esat digifone became part of bt wireless. esatbt installed the first dsl lines in ireland, and operate one exchange, in limerick. it has been suggested that bt's northern ireland operations may be merged into bt ireland at some point in the future.

bt's global alliances

in june 1994 bt and mci launched concert communications services which was a $1 billion joint venture between the two companies. its aim was to build a network which would provide easy global connectivity to multinational corporations.

this alliance progressed further on 3 november 1996 when the two companies announcement that they had entered into a full merger agreement to create a global telecommunications company to be called concert plc, which would be incorporated in the uk with headquarters in both london and washington dc. this would have given bt an entry into the us market and mci a global reach. the merger proposition gained approval from the european commission, the us department of justice and the us federal communications commission and looked set to proceed. however on 1 october 1997 worldcom made a rival bid for mci which was followed by a counter bid from gte. mci accepted the worldcom bid and bt pulled out of its deal with a generous severance fee of $465 million. bt made even more money when it sold its stake in mci to worldcom in 1998 for £4,159 million on which it made an exceptional pre-tax profit of £1,133 million. it also avoided being mired in the later worldcom scandal.

bt also bought from mci its 24.9 per cent interest in concert communications making concert a wholly owned part of bt.

bt then later had a dalliance with at&t as a possible alternative global partner but nothing came of this.

more recently bt has acquired italy's second largest operator, albacom, providing bt with another major network outside the uk. in february 2005 the infonet acquisition was a fact, giving bt entry into geographies it had no presence yet. at last it bought radianz, which might use old technology, but also expandanded bt's coverage, provided bt with more buying power in certain countries and gave access to the financial markets.

yell group and o2 demergers

in june 2001 bt's directory business was demerged as yell group. a larger demerger followed in november of the same year, when the former mobile telecommunications business of bt, bt cellnet, was hived off as a separate business named mmo2. this included bt owned or operated networks in other countries, including bt cellnet (uk), esat digifone (ireland), and viag interkom (germany). all networks now owned or operated by mmo2 (except manx telecom) were renamed as o2.

this was a move designed to remove the burden of debt with which the company had encumbered itself, much of which was acquired during the bidding round for the 3rd generation mobile telephony (commonly known as 3g) licenses. the de-merger was accomplished via a share-swap, all british telecommunications plc shareholders received 1 mmo2 plc and 1 bt group plc (of which british telecommunications is now a wholly owned subsidiary) share for each share they owned. british telecommunications plc was de-listed on 16 november 2001 and the two new companies started trading on 19 november. mmo2 plc was replaced by o2 plc in a further share-swop in 2005.

bt as it is today

in april 2003, bt launched its new corporate identity. the bt logotype from 1991 was retained, but the piper was replaced by a connected world. esat bt retained the piper for nearly two years after it was dropped by its parent.

oftel's strategy for telecoms deregulation in the uk through the 1990s was to drive down bt's market share. it aimed to achieve this by restrictions on the size of its price increases and by forcing it to allow other telcos to gain access to the connection between the exchange and the customers premises.

this has been successful in the area of telephony resale through independent service providers (isps) but has left bt as the dominant operator in adsl connections and local loop provision.

in 2003 bt resumed its participation in the uk mobile market with the launch of bt mobile. the company denies the move is a u-turn, describing the sell-off of mmo2 as the best move for shareholders and investors. bt wishes to reach younger consumers who use bt's fixed line services less than previous generations. bt mobile is a reseller of mobile services supplied by the uk's mobile operators and no longer owns a mobile network.

bt has also re-entered the market for hardcopy telephone directories, an offering which it curiously classifies as 'new wave'.

bt openreach was announced in september 2005 at the instigation of ofcom to provide an open and equal service of provision and repair in the last mile of copper wire. this business was formed from 25,000 engineers previously employed by bts retail and wholesale divisions. it is designed to ensure that other independent telephone service providers (isps) have exactly the same operational conditions as parts of the bt group. it opened for business on 11 jan 2006.

bt broadband

bt broadband is an adsl isp in the united kingdom, operating under the bt retail division of bt group plc. there are currently four different packages available based on usage guidelines.

bt broadband uses the bt centralplus scheme, and so are unable to offer static ip addresses.

financial performance

year ended turnover (£m) profit/(loss) before tax (£m) net profit/(loss) (£m) basic eps (p)
31 march 2005 18,623 2,343 1,821 21.4
31 march 2004 18,519 1,945 1,414 16.4
31 march 2003 18,727 3,157 2,686 31.2
31 march 2002 20,559 1,461 995 12.0
31 march 2001 20,427 (1,031) (1,810) (27.7)
31 march 2000 18,715 2,942 2,055 31.7
31 march 1999 16,953 4,295 2,983 46.3
31 march 1998 15,640 3,219 1,706 26.7
31 march 1997 14,935 3,203 2,077 32.8
31 march 1996 14,446 3,019 1,986 31.6
31 march 1995 13,893 2,662 1,731 27.8
31 march 1994 13,675 2,756 1,767 28.5
31 march 1993 13,242 1,972 1,220 19.8
31 march 1992 13,337 3,073 2,044 33.2

market position & power

in 1984 the telecommunications act set the framework for a competitive market for telecoms services by abolishing bt's exclusive right to provide services. in the early 1990s the market was opened up and a number of new national public telecommunications operators (ptos) were given licences. this ended the duopoly that had existed in the 1980s when only bt and mercury were licensed to provide fixed line telecom networks in the uk. although bt remains a powerful market force, it does not dominate to the same degree as many other former ptts in their historical home territory.

bt was slow to move from layer-2 to layer-3 (specifically ip based) services in the early 1990's. btnet, the companies internet arm, did not enter the market until january 1995. as a consequence bt conceded a potential leading position in that market to new domestic entrants and acquisitive foreign operators. this was a mistake that the company is yet to fully rectify.