March to mobile broadband leaves BT flatfooted

BT it seems is finally waking up to the mobile broadband revolution. According to a report from the Observer, the UK’s largest telecommunications company is considering launching a mobile phone network. The move comes after the firm spectacularly failed to cash in on the mass migration of broadband to mobile devices such as laptops and phones. This, it’s fair to say, hasn’t gone down too well with BT’s shareholders.

And indeed why would it? Latterly, the company has appeared to lurch from one crisis to another. Worse-than-expected profits for the last quarter of 2009 were followed by the announcement of plans to cut costs by shedding thousands of jobs. The misery was compounded last week when the firm announced a second consecutive profit warning, alongside the news that its shares are now trading at near-20-year lows. The blame we were told lies with the global economic downturn since the Great Depression, blah, blah, blah.

But does it, really? Given BT’s failure to capitalise on the exponential growth of mobile broadband, it’s hard to look at chief executive Ian Livingstone’s management and not posit that some of the blame for the company’s shocking performance must lie with him. Not least because over the last 12 months, the number of UK mobile broadband users has grown to 7.3 million. That’s billions of pounds of revenue that has gone to smaller rival providers due to BT’s inertia to reacting to the seismic shift in the market.

In order to remedy their parlous situation, BT is now in talks with T-Mobile and 3 with a view to launching a mobile phone operation. However, by the time that these preliminary negotiations have become something more concrete and the specifics of branding and costs have been hammered out, it’s likely that up to a year will have passed. So that’s another 12 months of potential profit that BT will miss out on.

But if all this just meant a lower dividend for shareholders for a couple of years, it wouldn’t be a problem. After all it’s not really our concern. But alas that’s not the case. As a consequence of this mis-management and lack of market awareness, BT is now threatening to renege on pledges to fund the roll-out of the fibre wire network. The result? The taxpayer could now be forced to shoulder the burden.

Once upon a time thanks in part to its charming and successful ad campaigns, such as those starring kids’ favourite Buzby and Maureen Lipman’s Beattie character, and the bold modernistic architectural style of the BT Tower, BT was seen as a great British institution a few rungs down in our affection from the BBC. However, once we’ve dug into our pocket to bail them out, it’ll be just another struggling company whose financial imprudence we’re irritatingly having to bail out.