BT has "unveiled plans to overhaul its business structure after posting its best quarterly revenue growth in more than seven years" and sealing a landmark £12.5B ($18B) takeover deal of Britain’s biggest mobile company, EE, according to Tara Cunningham of the London TELEGRAPH. In the three months to Dec. 31, the telecom reported a 4.7pc rise in sales to £4.6B ($6.6B), "while adjusted pre-tax profit grew" 14pc to £928M ($1.3B). The group's consumer business unit enjoyed "a standout quarter" as it captured 71pc of new broadband customers. BT also "reiterated its previous forecast for revenue growth" of between 1pc and 2pc for the full year. Separately, BT said that it "would have six business units following the EE merger -- two serving consumers, two focusing on business and the public sector and two providing wholesale services to industry rivals." The new consumer business, BT consumer, will serve 10 million households "with broadband, telephony, TV and mobile services." The wholesale and ventures division will "provide services to 1,400 communications providers," while Openreach will be unaffected by the reorganization (TELEGRAPH, 2/1). REUTERS' Paul Sandle reported BT said that EE's consumer products and stores would be "one of six units" in the reorganization of the group. Another new division, called business and public sector, "will serve enterprises with combined fixed-line and mobile products," an area analysts have said is "ripe for exploitation since EE has lagged mobile rivals Vodafone (VOD.L) and O2 UK in the business market." The acquisition of EE "completes a transformation of BT from a staid former fixed-line monopoly into an aggressive competitor in television content, where it is taking on Sky (SKYB.L) to secure expensive live football rights, as well as in superfast fibre broadband." BT's growth "has not come at the expense of Sky, however, which on Friday said it had added 144,000 broadband customers, ahead of BT's 130,000 retail broadband customers." Citi said that BT's improved revenue forecast for the full year ending in March of a rise of 1-2% from its previous forecast of "growth" left room for consensus upgrades. Citi said, "BT has taken the opportunity of the EE acquisition to make what looks to us to be a sensible business reorganization" (REUTERS, 2/1). In London, Daniel Thomas reported as a result of the deal, Deutsche Telekom, EE’s co-owner alongside Orange, "has become the largest shareholder in BT" with a 12% stake. A number of EE execs have "left the mobile group," including CEO Olaf Swantee. The company’s customers are "unlikely to see any immediate changes but BT is expected eventually to bring EE’s mobile contracts into its bundles of TV and internet services." Analysts at Mirabaud said that the results were “extremely good, ahead of our forecasts and consensus at almost every level.” JPMorgan said that the third-quarter numbers were "ahead of its expectations, with revenues boosted by better results at its global services arm and earnings helped by growth at its consumer business." The bank "increased its revenue target for BT" (FINANCIAL TIMES, 2/1). FT reported the "overhaul also comes as BT faces the threat of break-up," after U.K. communications regulator Ofcom last year began seeking views on whether Openreach -- which allows competitors access to BT's local access network in Britian -- "should be hived off." The regulatory spotlight on Openreach has been welcomed by some of BT's competitors, including TalkTalk, which has urged Ofcom to take "bold, radical action such as the separation of Openreach." Openreach will operate "separately to the wholesale and ventures unit." BT said that Openreach will "operate at arm's length from the rest of BT" (FT, 2/1).
