Despite posting strong pre-tax profits of UKP757m for the first quarter, up from its own estimate of UKP735m, British Telecommunications Plc is not hanging out the flags yet. Chairman Iain Vallance warned: Tighter price control will come into operation on August 1 as competitive pressures continue to increase. In August industry watchdog Oftel introduces a new price cap, and continues to invite more competition for BT. The profits are below analysts expectations of between UKP750m and UKP786m, and compare with a pre-tax profit of UKP596m last time which included a loss of UKP135m from the sales of subsidiaries. The comparable profit is put at UKP735m, after adjusting for the effect of these disposed subsidiaries. Growth this time came mainly from increased telephone exchange line rentals, up 8% to UKP595m, due both to the 5.9% price increases imposed in January and to an increase in system size; and from international calls up 14.7% to UKP499m. Inland telephone call turnover was flat at 1,261m. Cellnet and Yellow Pages had sound performances, but private circuit turnover and income from other UK operators declined. Operating costs rose 1.95% to UKP2,522m, despite a 3.7% reduction in staff costs to UKP1,031m, after job cuts last year. The workforce was cut 1,200 to 169,500 in the quarter, making redundancy costs of UKP53m. BT aims to cut 15,000 staff in this financial year. The planned 20% stake in MCI Commmunications Corp, announced June 2, progressed with a $830m payment for 4.9% of the shares, and the balance of the $4.3bn will be paid at closing. Despite this, net indebtedness is UKP1,730m, against UKP1,762m last time, and gearing stands at 13.5%. Capital spending on plant, equipment and property fell 5.1% to UKP467m.
