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Is BT Still Global? – IT Connection

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Gary Barton – Analyst, Business Network and IT Services

Summary Bullets:

  • BT’s comments on its global future have been at best uncertain and have left significant room for speculation that a divestment is coming.
  • BT also has plenty of reason to hang on to the BT Global division, including around 1,000 MNC customers, and it is investing in delivering global network-as-a-service (NaaS) capabilities from 140 PoPs.

Speculation over the future of the multinational corporation (MNC) unit BT Global (formerly BT Global Services) is not new. But recent comments in its financial results, for the year ending March 31, 2024, have set the fires of speculation a roaring once more. Speculation has been further stoked by a BT Focus 2024 analyst event that was both very UK-focused and again non-committal beyond several suggestions that it is exploring its options.* The winds of global competition are certainly blowing against service providers and that BT absolutely must consider its future go-to-market approach, but, despite a few missteps, BT has also been one of the more global service providers.

BT has long had a reputation as one of the most capable providers of global managed telecoms solutions with a customer base including some of the largest enterprises on the planet and international political entities such as NATO. It has also been the victim of its own ambition for much of the last 20 years. Attempts to become a global outsourcer were unsuccessful and left BT encumbered by unprofitable or low margin legacy global contracts. However, the company has now successfully churned much of its difficult legacy business and is approaching a level of stability (if not growth) for the BT Global unit.

And yet, potential signs of an exit from the global market are there for all to see. BT has sold off much of its local access assets in Europe (e.g., Spain, Germany). BT Global (Services) has also born a significant share of the various head count reduction processes that BT has enacted over recent years. On top of this, the biggest and most recent sign of change has been its public comments in 2024 – and these comments gain extra significance as they have been spoken in response to direct questions about BT’s global future.

BT has stated that it believes that the global, and especially the European, international telecoms market needs to consolidate to remain viable. The margins available to telcos from global network services are reducing and scale achieved through mergers and acquisitions is, one of, the answers. BT has also stated that it is looking for partners in Europe/globally to change the way it does business.

So, the question remains: Is BT still global? It is certainly reasonable to suggest that the answer is yes, but it is trying not to be. The provider has already acknowledged that its MNC focus is all but exclusively on enterprises HQ’d in the UK, and that its growth ambitions are centered on the UK SMB space.

These factors do not conclusively suggest that BT wants to be UK only. Other service providers have adopted a similar stance without ditching their global units, and BT is also still winning extensions to contracts with existing global customers who do not seem to fear imminent change.

Another elephant in this crowded room is BT Global Fabric. The newly launched NaaS proposition from BT is definitely a global platform (although its deepest presence will be in the UK) – and if it delivers on all that it promises it will be a very good one. This is a significant network rebuild for BT shifting from four networks to one. Why would it make all this investment in a global platform if it were no still intending to be global? Similarly, why would it have built out global CPaaS and IP voice capabilities?

BT has spoken of being asset lite. Certainly, it will not pursue a model similar to Colt of building/acquiring international fiber assets to serve the wholesale/hyperscaler market. The answer may well then lie in a hybrid model. BT may sell off some or all its global WAN network assets and retain its PoPs in carrier neutral facilities (CNFs – e.g., Equinix and Digital Realty) connected by long-term leased assets. How well its intelligent underlay message would be able to withstand such a move is unclear, but it is far from an unworkable approach.

BT needs to change, and drastic action is not unreasonable when the threat to its business model is clear and present. However, BT remains a powerful force in the global telecoms market, and it would be a shame if it walked away from it altogether.

*GlobalData will produce more in-depth cover of BT Focus 2024 later in October 2024.

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