As the UK’s incumbent telecommunications operator, and something of a national institution, BT arguably comes in for more than its fair share of criticism from the great British public.

And while the telecoms giant may have failed to significantly improve perceptions of its customer service record so far, it has at least embarked on an ambitious transformation to change its structure, strategy and attitude.

The company is now split into what it calls four customer-facing units: BT Retail, BT Wholesale, BT Global Services and Openreach, the access division created in 2005 in response to regulatory pressure to provide fair and equal access to BT’s copper telephone network.

BT also announced a period of restructuring in April 2007 that will see a total of 5,000 managers leave the company by the end of this financial year.

The company says that it has recruited, or intends to recruit, an equal number of Openreach staff in their place, many of whom will be engineers, as it strives to improve its customer service record, both for rival firms leasing BT Wholesale services and the thousands of businesses and consumers leasing a range of leased-line, broadband connections and add-on services.

More recently, BT created two new units, BT Design and BT Operate, designed to bring IT, networks, operations and design under a single reporting structure, effectively separating BT services from the underlying telecommunications network that enables their deployment.

The result of restructuring is a new approach to the way BT thinks and acts in its business dealings, says Scott Morrison, research director for the enterprise network services group at analyst Gartner.

“All of the divisions within the BT Group now view the world in a different way,” he says. “A couple of years ago, it was fortress BT versus the rest of the world, including wholesale customers, but BT is now much more customer-centric in its words and actions.”

To a certain extent, the changing telecommunications landscape and shareholder expectations prompted the change. Peter Nuttall, European telecoms analyst at Forrester Research, says BT ­ like all other telecommunication specialists ­ has been facing steadily declining revenue from the provision of voice telephony services for a number of years, and has been forced to find new sources of income to offset the decline.

“BT is a company that has had to change dramatically over the past three to four years, to the point where it has almost re-invented itself. Hence the emphasis on new revenue streams from wholesale access and global services,” he says.

The BT Group’s revenue for the third quarter of 2007 remained flat at £5.1bn, one per cent up on the same period in 2006, with pre-tax profits falling by 30 per cent from £639m to £447m.

Restructuring costs of £76m undoubtedly took their toll, but particularly hard hit was revenue from BT Wholesale, the division that sells capacity on BT networks to rival internet service providers (ISPs), which fell by £51m to £891m.
Revenue from BT Retail, which encompasses BT’s own broadband services, remained flat at £2.07bn, as did sales for Openreach, which maintains BT’s last-mile voice and data network for wholesale and retail customers.

The bright spark for BT was its Global Services division, which is steadily moving towards becoming an IT services company that is able to deliver managed network, PC and communications packages to business customers. Global Services saw its revenue for the third quarter of 2007 rise six per cent to £1.96bn from £1.84bn a year earlier, although they still fell short of BT’s earlier projections.

“BT’s latest results confirm what we have seen for the past three quarters, which is that BT Global Services is the carrier’s engine for growth,” says Morrison.

“Though it has pushed the margins in that segment up on the back of increased revenue and better quality revenue, they are still not at the 15 per cent promi sed in the mid-term objectives, and have not shown consistent and sustainable improvement in that area. There is still work to do there.”

Nuttall says the biggest concern lies with BT Retail, mainly because the division is so heavily reliant on broadband revenue. “Though there is still potential for growth in the broadband market, with a limited base of dial-up users still to be converted. It is still a very aggressive market, with lots of ISPs offering free products and services with broadband subscriptions,” he says.