The unit’s revenue was down 7% year-on-year to £2.33 billion, compared with £2.51 billion for the first half of its last financial year. The division cut costs and the division managed to convert a six-month operating loss of £67 million a year ago to a profit of £22 million in the first half of 2018.
The company said that BT Global Services’ revenue included “a £39 million negative impact from foreign exchange movements”.
CEO Gavin Patterson, presenting his last results before handing over to Philip Jansen on 1 February, said: “We continued to generate positive momentum in the second quarter resulting in encouraging results for the half year.”
He did not specifically mention BT Global Services in his main comments, but added: “We are successfully delivering against the core pillars of our strategy with improved customer experience metrics, accelerating ultrafast deployment and positive progress towards transforming our operating model.”
In its detailed figures, BT said it was transforming the group’s operating model. “Our cost transformation programme is on track. Our restructuring programme has removed c2,000 roles in the period, with the largest element being from Global Services.”
The division is “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 cyber security; and, moving to lower costs, reduce risk and improve returns,” said the company.
“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 cash flow, and thereby deliver a double digit return on capital employed in two years.”
It added that “in October, Global Services agreed the sale of part of its operation in Germany, BT Stemmer, to Bechtle”. This division generated around €50 million revenue a year. The deal still needs regulatory approval before Bechtle, an IT systems and services company, can take control.
BT said that operating costs for Global Services for the half year were down 10% mainly reflecting the decline in IP Exchange volumes and equipment sales and lower labour costs” in line with the strategy to transform its operating model”. It added: “Capital expenditure was down 23% for the half year reflecting ongoing rationalisation and including deferral of spend into the second half of the year,” and noted: “The total order intake in the half year was £1.4bn, down 18%.”
The company’s challenges continue following an accounting scandal at the Italian operations of BT Global Services, revealed in early 2017. BT is facing a class action suit, first filed in New Jersey a year ago. That was overturned in August but a second amended complaint was filed on 1 October 2018. BT has asked for this complaint to be dismissed.
