In a new report, the independent telecoms analyst points out that BT Global Services, a division of BT, relies on the public purse for nearly a quarter of its business. However, Ovum believes that if the company is affected by the new coalition government’s spending review, the loss of contracts would not just affect its own bottom line and growth potential.
According to David Molony, an Ovum principal enterprise analyst and report author, it would also be bad news for the company’s competitors.
He said: “The public sector is undoubtedly important for BT Global Services: contracts such as Connecting for Health or DWP in the UK account for 23 per cent of business. The new UK coalition government spending review now underway may affect all of these contracts, and for that reason, we have doubts over the company’s ability to continue to generate revenue growth in global services.
“However, for its competitor service providers, a loss of public sector contracts by BT Global Services could be doubly bad news as the company may turn on them to try and win back local government business especially, in an effort to make up for lost or delayed ICT contracts.“
Although the effect of public sector spending cuts on BT Global Services and its competitors could be a potentially negative one, Molony is quick to point out that there could also be winners.
He added: “For BT Global Services’ commercial customers public sector cuts could actually be good news as the company will have to pay them more attention and do more for them to keep them loyal.”