BT sets profit deadline for BT Ignite units

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ITworld.com –

Telecommunication operator BT Group PLC will close those units of its BT Ignite Internet-services business that aren't making a profit before interest, taxes, depreciation and amortization by March 2003, the London company said Monday.

BT Ignite operations in Germany, the Netherlands and Spain are struggling most today, said a BT Group spokesman.

"We are fairly confident that we can turn these businesses around and will be able to make them profitable by March 2003. If we can't then we will pull the plug," he said.

BT Ignite, which operates in many European countries, is refocusing on large multisite corporate customers. Outside the U.K., no further investment will be made in services for consumers and small and medium-size businesses, the spokesman said.

The announcement Monday is part of a broader set of plans for BT Group under new Chief Executive Officer Ben Verwaayen, who took over on Feb. 1. The company intends to be more customer focused, while keeping a close eye on its bottom line and further reducing debt, according to a statement announcing its plans.

"The balance (for BT) is around passion towards customers and discipline towards financials," said Verwaayen in a presentation broadcast via the Internet.

BT has set itself a target of reducing customer dissatisfaction by 25 percent a year. Key in its "relentless drive to customer satisfaction" is to make it easier for customers to contact the company. BT plans to create multifunctional contact centers and upgrade its Web site, the company said.

To achieve revenue growth, BT will expand its business offerings in the areas of outsourcing, mobility, customer contact centers and IP (Internet Protocol) network integration, the company said.

BT also announced it is upgrading over 100 more local exchanges in the U.K. to offer DSL (Digital Subscriber Line) services. Around 1000 have already been upgraded.

For consumers, BT will soon launch a direct broadband offering for broadband connections, cutting out Internet service providers, and said it plans to use DSL to deliver video and multimedia.

"This is like a dial tone for the Internet," said Verwaayen about the direct DSL offering.

The company has set targets of achieving 5 million broadband connections by 2006.

On the financial side, BT has set a 28 to 30 percent margin target for earnings before interest, tax, depreciation and amortization for the group. The company aims for 6 to 8 percent profitable organic annual revenue growth, and earnings per share growth of at least 25 percent a year through 2004/2005.

BT plans to continue eliminating between 5,000 and 6,000 jobs a year, start paying a dividend again this year, and bring down its debt to below

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