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BT keeps riding the new wave

Telecoms giant posts solid second-quarter results, but the real key to its financial future lies in how it handles IPTV and home networking
Written by Tom Espiner, Contributor

BT's second quarter results to 30 September, 2006 were released on Thursday, showing a 4 percent revenue rise to £4,941m, and a 12 percent rise in pre-tax profits to £655m. Mobility and broadband, which BT calls "new wave revenue", was up 21 percent to £1,736m.

Ovum analyst Mike Cansfield called the set of results "predictable", with revenue and profits growth almost identical to the first quarter.

However, Cansfield said that the "real story" of BT's financial future revolves around changes to be introduced by the end of the month that "will signify how BT is moving from the old world to the new".

BT is slated to switch on 21CN, its IP-based next-generation network, in South Wales before the end of the month. Cansfield predicts the process of shifting to 21CN by 2011 nationally will "greatly simplify [BT's] network and systems operating structure, and enable it to both speed up and automate service delivery."

BT's shift into the consumer internet protocol television (IPTV) arena is likely to disrupt the market, according to Cansfield, as BT now has a broadband base of three million customers. BT is due to launch its IPTV product this autumn.

BT also has over 250,000 of the home hubs required to provide the platform for the service, said Canfield. The home hub has Wi-Fi connectivity, and is also the basis for Fusion, BT's fixed-mobile convergence product.

"These new services are seen as the great hope for growing new revenues in the consumer space," said Cansfield. "How well BT can exploit the potential of 21CN, develop and deliver new services, and above all market them is the big challenge for BT."

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