|BUSINESSWEEK ONLINE : JULY 12, 1999 ISSUE|
|INTERNATIONAL -- INT'L COVER STORY
BT Worldwide's Mockett: "We're Building a Global Internet Network" (int'l edition)
As president and chief executive of BT Worldwide, Alfred Mockett has successfully faced the challenges of deregulation and the Internet. How? By developing relationships with local providers in other companies and by viewing new technology as a tool rather than a threat. Mockett recently discussed BT's strategy with Business Week Correspondent Kerry Capell. Here are edited excerpts of their conversation:
Q: How has BT's global strategy evolved?
A: We've come a long way in the five years since we brought together all our international activity under the one roof of BT Worldwide. We have quietly gone about our business building a new age communications company. We are looking for markets where we can sustain 20% to 25% compound annual growth for the foreseeable future. BT is posting impressive growth rates by focusing on the high-growth areas of mobility, data, and Internet.
Q: How is the Internet changing BT's business?
A: There is no doubt that the Internet is fueling a lot of our growth. Internet protocol is the definitive protocol for us from here forward. The Internet as we know it is in a rapid state of change. We are positioning ourselves to be one of the leaders in its next evolution.
To do so, we're building a global Internet protocol network, initially targeting the world's largest 100 cities. Each of our ventures around the world is either acquiring or developing their own ISP [Internet service provider] capability. Some 95% of Concert's revenues for data come from Internet traffic. BT can bring together seamlessly the public world of the Internet with the corporate world of the intranet and extranet.
Q: What has been the impact of telecom deregulation?
A: We have taken a pioneering role in forcing the pace of liberalization, which has enabled us to move into some of the biggest markets in the world and take on the incumbent. We've taken a local approach because national markets are more receptive to national players. It helps us fit in better in the culture and business environments in which we like to play.
What we do is form broadly based partnerships with a number of powerful local players. We look for companies that are politically connected, because winning licenses, to some extent, is a political game. Our partners must be financially strong, with a solid customer base and areas of expertise that complement our own. We also look for companies that can contribute distribution channels for our services.
Q: Which markets did you move into first?
A: We applied this strategy to Europe first. BT began positioning itself in 1994 to get ready for the opening of the marketplace which occurred last year. Europe was our natural home market and our first port of call. We initially went after the top seven markets, which gave us 85% coverage of the addressable market in Europe. We now have 9 mobile, 12 fixed, and 23 satellite-based licenses. This is the most comprehensive suite of licenses of any player in Europe.
To date, we've invested from $5 billion to $6 billion. But including the investments we have made with our other partners, the total is around $20 billion. Our European ventures produced $6 billion plus in revenues for the fiscal year ending March, 1999, and we expect that to hit $20 billion by 2002-03.
Q: How will BT continue to grow its market share in Europe?
A: We are looking now at those markets which will join the EU such as Central Europe, Greece, and Turkey. In addition, we are tying all our European investments together with a pan-European backbone network, which is a high-speed Internet access. This connects 200 European cities and was launched in March.
We're also pushing the pace of fixed-mobile convergence. This is one of our unique strengths that differentiates us in the marketplace because we are the first to do it. In Germany, we are piloting Homezone, a service that lets our customers use their mobile phone like a wireline phone. It is a roaming phone differentiated by tariffs. This will be available later this summer. We are pursuing the same strategy where we have both fixed and mobile licenses.
Q: What is BT's strategy in Asia?
A: Asia will be the engine for future telecom's growth. The market worldwide is close to $1 trillion, and Asia presently contributes 19% to 20% of that. Within a decade, Asia will account for 50% to 60% of the total market, so there's massive oportunity for growth.
We started looking at Asia in earnest last year. Over the last 12 months we have invested more than $2 billion in Asia Pacific. We invested at the bottom of the currency and local stock markets in every place in Asia.
Our first investment was in a consortium where we won the second fixed and third mobile license in Singapore. This was followed by licenses in Korea and Malaysia. We moved into Hong Kong this year by investing in the mobile operator smart tone. In Japan, AT&T has 10%, and we have 20% in Japan Telecom.
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