Global Services continues to drag down BT

Services arm blamed for overall sales decline

BT Global Services continues to weigh heavy on its parent company after seeing sales decline seven per cent.

The wider BT business saw revenue for the six months ending 30 September drop two per cent year on year to £11.6bn, which it blamed on regulated price reductions in Openreach and struggles in its enterprise businesses.

BT said its Global Services arm was the "main contributor" to the overall revenue decline, with the division's sales for the six-month period dropping to £2.3bn.

Outgoing CEO Gavin Patterson said: "We continued to generate positive momentum in the second quarter, resulting in encouraging results for the half year.

"We are successfully delivering against the core pillars of our strategy with improved customer experience metrics, accelerating ultra-fast deployment and positive progress towards transforming our operating model.

"Our strategy is delivering, with benefits evident from the steps we've been taking to simplify and strengthen the business and improve efficiency."

Earlier this year BT announced a radical restructuring that would see it cut costs in Global Services "significantly".

In its latest report, the telco said that the rescue plan has so far seen 2,000 roles "removed" - the majority of which came from Global Services.

It added that the cuts are so far saving it £350m annually, but the costs of the cutting programme currently stand at £206m.

BT also offloaded its German VAR last month, which sat in the Global Services arm.

On the future of Global Services, BT said: "In September, Global Services held a business briefing which set out a clear path to transform the business.

"This includes repositioning around its core markets and multinational customers; building value in strategically selected areas of growth where Global Services can add real value and differentiate on service, including cloud and network infrastructure, cloud collaboration and cybersecurity; and moving to lower costs, reduce risk and improve returns.

"As a result of these actions, Global Services will deliver differentiated service and, over the medium term, reduce operating costs and capital employed, resulting in improved EBITDA and free cashflow, and thereby deliver a double-digit return on capital employed in two years."