BT faces struggle with broadband Competition

Telecoms group BT will face “one of its toughest ever years” in 2009 as revenue from landline phone calls continues to decline and broadband reaches saturation point, according to a new report.

The decline in fixed-line telecoms may be so severe that telephone and broadband infrastructure companies, such as BT and Virgin Media, may have to delay or abandon plans for next-generation broadband.

The report by the telecoms adviser, Analysys Mason, said European telecom companies face a “triple whammy” of collapsing demand for landline calls, a slump in broadband growth and the looming recession.

“Rapidly saturating broadband means we are entering a new phase for fixed telecoms,” said Rupert Wood, principal analyst at Analysys Mason.

“Many players will draw back from next-generation broadband, as it is open to question whether they will make a return on all that investment in fibre.”

The report also predicts landline phone calls will decline by more than 50pc by 2014 as consumers and businesses switch to mobile phones.

BT said it has no plans to halt its £1.5bn investment to bring superfast fibre optic broadband to 40pc of UK homes by 2012.

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