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Business Management

BT shows that shedding telco reliance is a tough call

The dramatic slump in BT’s shares yesterday underlined the high-stakes challenges faced by telcos all over the world.

Of course the elephant on BT’s table that led to the company dropping about a fifth of its value was an Italian accounting crater but shares were marked down also by the company warning of sub-par incoming business elsewhere. Shorn of its protected status as the UK’s incumbent carrier by Margaret Thatcher, BT is no longer cossetted by government and at the same time it must face up to the obvious facts that call minutes will no longer cut the mustard.

Sensibly, BT has long been on the road to diversification and, despite a reputation for the opposite, it has often shown an innovative and even bold face. It was early to see the opportunities in offering ICT services and it also has successfully emerged as a force way beyond its national fortress. BT Global Services, for example, is a force to be reckoned with across Latin America.

BT was also a pioneer of cellular networks and recently re-joined the fray with the purchase of EE. In recent years BT has even shed its traditional networking carapace to edge into adjacent markets, most notably by setting up a digital TV service and then audaciously purchasing coverage of blue-chip sports tournaments such as English Premier League football.

If the Italian machinations weren’t enough BT is now being hit by among other things, a slowdown in government and corporate spending on infrastructure. Worse may wait in the shape of shareholder class-action suits and Brexit-related economic uncertainty.

As other former telcos testify, making the long-haul connection to create what is effectively a new company with a very different culture is not always easy to deliver, no matter how much cable is laid.  

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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