Despite Woes, British Telecom Reports WAP's Revenue Is Up
By TSC U.K. Staff
9/20/00 10:45 AM ET
British Telecom's (BTY:NYSE ADR - news) wireless arm revealed this morning that users of its WAP phones are spending $141 more each year than customers who use voice-only mobiles.
Other major telcos such as Vodafone (VOD:NYSE ADR - news) will welcome the news, since they, too, are hoping that an explosion in data traffic will help to limit damage done by declining revenue and margins from voice traffic.
During an hour-long presentation to analysts, BT also said the number of its Cellnet WAP, or wireless access protocol, users has more than doubled to 400,000 since June. That does not include the 600,000-odd customers who have picked up the phones through deals with BT's banking partners such as Egg.
Since the WAP phones, which offer limited Internet access, were launched last autumn they have been roundly criticized for being too slow and user unfriendly. There have also been concerns that demand for data over mobiles is limited.
Still, news that BT Wireless is making higher revenues from data than voice is a big boost for the unit, which has led the way in pushing WAP. Chris Godsdmark, an analyst at Investec Henderson Crosthwaite who attended the presentation, was particularly pleased by the news. "It was very encouraging," he says. "They have clear and demonstrable evidence of average revenues rising as a result of data."
"There is quite a good mobile-data story there," adds another analyst who attended the presentation but did not wish to be named. At the meeting, BT directors also revealed that the build-out costs for third-generation, or 3G, mobile licenses will be lower than previously expected because of increased competition between Nortel (NT:NYSE - news) and other equipment suppliers keen to get a slice of the market.
BT Wireless expects its network capital expenditure -- most of which will be for 3G -- to be $2.1 billion to $2.8 billion up to March 2003. "That is good news because it is less than they originally thought they would need for building out the 3G network," says Paul Mount of Nomura.
The company's stock has been volatile in recent weeks on rumors that it is considering a merger or extended partnership with AT&T (T:NYSE - news). BT slipped 18 pence to 792 pence this morning, back below the 800 pence benchmark. Still, many analysts think the stock could recover slightly, once news of the presentation filters out to the market.
The presentation was the first in a series by BT's various business lines before the company reveals its overall strategy. BT Wireless is widely expected to be spun off to the public at some point.
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