It’s devilish tricky to pull apart the many different pieces that comprise BT Global Services to determine which really belong to ‘our’ space - i.e. software and IT services (SITS) ‘within the meaning of the Act’. So for now we’ll have to make do with the consolidated numbers. And those paint a picture of profit and cash flow recovery, though only the latter is back in positive territory.
BTGS’ headline revenues for the year to 31st March declined by 5% to £8.05b. Adjusted EBITDA margins increased from 5.4% to 7.4%, though ‘true’ operating profit remained in loss to the tune of £141m, still a huge improvement on the prior year’s £358m loss. Operating cash flow was £119m, compared to a near £0.5b loss the prior year. BTGS derives two-thirds of its revenues from ‘ICT and Managed Services’, and revenues for these activities grew by 0.5% in the year to £5.3b. But as I say, there’s a lot of unpicking yet to do to isolate out the ‘pure’ managed voice and data services activities. We are pretty sure the SITS bit declined.
Last year we estimated that BTGS generated about £1.44b in the UK SITS market – including a goodly chunk from the erstwhile National Programme for IT – firmly positioning it within the UK SITS Top Ten. As we compile this year’s rankings, we don’t doubt BTGS will remain a ranking player. BT is also ‘involved’ in the UK SITS market in many other guises, including as a major client of many leading SIs – and very notably, the India-based SIs. BT also still owns about a quarter of Tech Mahindra, its joint venture with Indian industrial conglomerate, Mahindra & Mahindra (see BT slims Tech Mahindra holding).