Global brands: High-speed broadband and better service help boost BT
The turning point for many at BT was felt during the balmy summer nights of the London Olympics in 2012, where an exclusive sponsorship was turned into a celebration for a company emerging from a tough few years of restructuring and cost-cutting with aggressive plans for the future.
Little could temper the excitement around the Olympics, which went off without a hitch for BT’s communication network. Some of that magic was felt to have rubbed off on the former national monopoly.
“The Olympics gave us a rallying cry,” says Gavin Patterson, BT chief executive. “That began to change people’s perception outside but had an even greater impact inside.
“It gave people some confidence that after a couple of difficult years where we were resetting the business, there was the potential to grow again.”
BT had for many years laboured under the stigma of being a former state monopoly, with sluggish customer services and a bloated, unmotivated workforce.
The Olympics were a signal that things were changing within BT, positioning the group away from a traditional role in providing home phone calls to creating the future infrastructure of Britain for high-speed internet.
The BT board had made a crucial decision a few years earlier to invest more than £2bn in building a fibre network that would deliver fast broadband even in the midst of a widespread corporate restructuring that slashed thousands of jobs.
“We had to reset the business in 2008-09,” says Mr Patterson, referring to a difficult period when huge losses resulted from deep-rooted problems at the global services division.
On the back of the advanced fibre network and a more streamlined workforce, BT could think about moving from a defensive position of protecting traditional business from rivals to an offensive strategy. “The success of the fibre programme has been critical,” says Mr Patterson. “We have been rebuilding the business over the past five to six years and have made a number of strategic moves that have been well executed. These have impacted on the brand. A brand without substance doesn’t work.”
The shift in perception has been shared by investors. The share price doubled between 2012 and 2014, even as the company was making the sort of costly investments that shareholders tend to treat with distrust.
While the benefits to the BT brand of the fibre rollout have been gradual, Mr Patterson acknowledges the more instant impact of its shock decision to enter the pay-TV market.
Sky had previously seen off competition with ease, given its strong position in football rights in particular. BT took on the satellite broadcaster at its own game with a £2bn investment to secure rights to show some English Premier League football games, as well as other sports such as rugby and tennis.
“The move we made into sport caught everyone by surprise,” says Mr Patterson, who was part of the covert team that acquired the football rights packages. “It has demonstrated there is more than one way to look at this company – taking on a company of the quality of Sky and doing a very good job in creating an alternative. It has really shaken up how people look at the business.”
There is still work to be done, Mr Patterson admits. BT remains a large, sprawling company with a lot of legacy businesses that need to be maintained. The big bets on sports rights and TV still need to be proven right, while a fierce response is always a possibility from such aggressive competitors as Sky.