“Revenues were soggy,” opined Bernstein analyst Dhananjay Mirchandani on the subject of BT’s latest results.
There could scarcely be a more apt description of what Britain’s telecoms giant turned in. It could easily be extended to cover the last couple of years.
At the tail end of 2015, the shares came within sight of a £5 close. In the absence of a pick-me-up from somewhere they’ll very soon have halved.
So soggy mightn’t actually be strong enough. BT’s legion of shareholders are probably feeling drenched, and in dire need of a cuppa. At this point there are a lot of customers who’ll say “join the club”. And then there is UK plc whose chair, Theresa May, would like to know when she’ll be able to show off the superfast fibre broadband network the rest of Europe is getting.
Can chief executive Gavin Patterson find the kettle to make a hot drink for any of them?
“I look forward to supporting Gavin and his management team as we work together to serve our customers and our shareholders,” said incoming chairman Jan du Plessis in a message to staff.
If Mr du Plessis had said anything other than that on the day before the soggy results were released he’d be contending with a firestorm of frenzied speculation about Mr Patterson’s job prospects.
Best to consider hard questions like “is this the person who I need to turn this leaky ship around” without that to contend with.
Mr Patterson started off well but it is no secret that BT is in a funk and has multiple issues to deal with. He’s tried to offer its multiple stakeholders some crumbs of comfort, they are still only crumbs.
Efforts have been made to make life better for customers. Revenues fell by 2 per cent, and earnings by twice that much, in part because the company is spending money on improving the service it offers. But it’s hard to find anyone to sing BT’s praises.
Shareholders were told that the dividend policy remains progressive when some had feared a cut. But they have real cause for concern about the weak performance of parts of the business.
BT is talking with its partners, the Government, and regulators, about improving Britain’s fibre broadband network. But this has been dragging on and on and on, and, as a result, the nation remains in the broadband slow lane, which is exactly where it doesn’t need to be at this point.
As for staff? They’re in perhaps the worst situation. With an enormous pension deficit, their retirement planning is going to take a hit, and when shareholders get restive, as they are, executives tend to offer job cuts as a means of keeping them quiet.
The soggy way the business is performing means the pain is likely to extend beyond the workforce.
There is, however, a way to make the medicine go down more easily: can the man in charge and bring someone new in? A new CEO would be able to throw out the kitchen sink while promising jam tomorrow if everyone buys into their plan.
Mr Patterson doesn’t have long to replace “soggy” with “sunny” if he wants to prevent that from happening.
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