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BT Newsbyte
BT's quarterly newsletter for analysts, consultants and investors - Issue 43 - March 2017

Newsbyte talks to ... Gerry McQuade

Gerry McQuadeGerry McQuade is CEO, BT's Wholesale and Ventures division

What was the thinking behind the creation of Wholesale and Ventures?

First, we wanted to bring together Europe's leading wholesale fixed network service provider with the UK's leading wholesale mobile network service provider to make it easy for customers to buy both first-class fixed and mobile services from the same place. It made sense for us to converge those services over time.

Second, we wanted to bring together a number of specialist business units under the Ventures banner. This was partly about giving each of them more management visibility and attention, but more importantly, it was about utilising the capabilities in these businesses to build richer propositions across the business. For example, we're about to launch an integrated field force proposition which brings together fleet management, supply chain, data services and mobile analytics.

There are also synergies across the two areas of Wholesale and Ventures. Cost synergies definitely, but also revenue synergies from offering the full breadth of our portfolio across the full breadth of our customer base.

How did the acquisition of EE impact things?

Being able to offer services based on the EE network has obviously made a big difference to the breadth and depth of our offer. I've mentioned MVNO services already, but we also now offer IoT propositions, smart messaging services and big data products. On top of that, we gained the people with deep expertise in these areas. I like to think they brought a different perspective as well as a different set of experiences, and that's made BT even stronger.

What have you been focusing on in your first year within BT?

Establishing the vision, strategy and plan, and working out how to create value from the new combination of businesses and ensure we're driving growth. The traditional Wholesale business has been challenging over recent years with regulatory pressure and a move away from legacy products, however, the broader range of businesses and capabilities gives us many more opportunities to deliver growth in the future.

Once the strategy was set, it's been about signing deals as proof points of its success. Meanwhile, we've been finding new ways to strengthen our proposition, be that through internal integration or through acquisitions such as Pelipod and SEV. And finally, making it easier for our customers to do business with us. While we believe our portfolio is the biggest and the best, we also need to make sure we're easy to do business with and that our service is unparalleled.

Can you tell us more about the Ventures side of the business?

This has been created to foster growth, innovation and synergies across a portfolio of businesses while also serving BT as an anchor customer. There are currently ten businesses, ranging from cable manufacturing through to the IoT data-driven secure delivery locker called Pelipod.

All the businesses are market facing and we have a large and diverse customer base. We're winning new customers by cross-selling our products and services between our businesses, for example EDF and National Grid in Fleet and Supply Chain, while also expanding into adjacent customer segments, for example Tikit now sells its specialist software to professional services firms as well as law firms. We're also working with partners and making transformational deals such as LinkUK - a collaboration with Primesight and Intersection that will evolve our Payphones business.

There is real opportunity for us to grow and we have a dedicated team to support our aspirations. This team has developed innovative IoT solutions including connected vehicles and asset tracking which are now in trials within Fleet and Supply Chain.

How are the individual Ventures businesses run?

We have an MD for Ventures, Nick Hale, who leads the organisation and ensures that we achieve the maximum synergies and returns from the portfolio overall whilst ensuring that the individual leaders of each business maintain focus on their specific targets. The MD and Ventures business leaders work together to drive the strategy and performance forward.

What have been the biggest achievements for Wholesale and Ventures this past year?

We renewed the Virgin Media and ASDA MVNO contracts on long-term deals which secures our position in the wholesale mobile space, and in Ventures I'm really proud of the LinkUK partnership bringing digital innovation to the streets of London.

In Wholesale, we've been busily supporting the rollout of all the mobile networks to meet their coverage obligations and have been working closely with the EE Emergency Services project team to ensure their network rollout continues to meet the timescales required by the Home Office. At our Capital Markets Day last May, I stated that I had high hopes that the market would move more to a cloud-based telephony solution in the B2B space and that over time this would be a route to convergence; I'm pleased to say that this trend has started and we are seeing a major move in this direction.

Lastly, a small gem in our portfolio is our Media & Broadcast business which is now delivering on the contract we won last year for the BBC to build the biggest single broadcaster network in the UK. This represents a major shift in thinking in terms of broadcast engineering by being the first to deploy an end-to-end IP infrastructure to support TV and radio broadcast as well as voice, data and applications. We've also built the UK's first uncompressed outside broadcast network, for Premier League Productions (PLP), a partnership between the FA Premier League and international sports production company IMG. We now provide live HD video feeds between all 20 Premier League football stadiums and IMG's studios in London.

And can you say something about the challenges that you've faced?

The integration of EE and BT has been a challenge operationally but the teams have landed well and I'm pleased to say that you wouldn't know who came from where – they became one team very quickly.

The biggest challenge is that we operate in a market in a state of transformation. The move to IP, convergence, 5G, and the consumerisation of businesses are all dynamics which affect our propositions. That said, the challenge is our opportunity; we are best placed in the market to support our customers through that journey, but often that means we need to move from a product mind-set to a service mind-set.

One of the fascinating things for me coming into BT was seeing the level of innovation which was evident in the company; as a market-facing unit our job is to make sure we package that innovation in a way which is relevant to our customers' needs. Like any other business, we need to keep reinventing ourselves without losing sight of what makes customers buy from us today.

From a personal point of view, simply understanding a business as large and diverse as BT has been a real challenge as I think it would be for anyone!

What are your priorities for the year ahead?

Continuing the improvement on customer service remains a key focus for all of BT, so we'll keep improving our automated interfaces and ensure we're providing faster completion times for any issues.

We've been active in IoT projects across the UK and worldwide for a while now including smart cities, retail and logistics, but this year we'll be ramping up our customer propositions.

In Wholesale, we'll continue to invest in our product portfolio and expanded network coverage; and the Ventures are developing integrated services offerings for customers. We also have key moments we're looking forward to, including the first LinkUK kiosks going live and the 999 service celebrating its 80th birthday.