British Telecommunications Plc’s improved pre-tax profits, up 39.7% at ?2.76bn, reflect higher call volumes, both nationally and internationally. This leap in profits, however, shrinks to a more manageable 2.8% after eliminating redundancy and non-recurring charges. Chairman Sir Iain Vallance said that Office of Telecommunications enforced price cuts towards the end of the financial year, further redundancy costs and increasing competition would mean a tough year ahead. Revenue from inland calls rose to ?5,200m from ?5,090m, while international revenue edged up to ?1,960m from the previous ?1,860m. The company expects to make some 15,000 staff redundant this year, in line with a previous announcement. According to Michael Hepher, BT’s group managing director, no figures are yet available for the company’s voluntary management redundancy scheme introduced in April, but if numbers coming forward prove insufficient, British Telecom will consider an element of compulsion. Last year’s 15,000 redundancies cost the company ?517m, half the ?1,030m of the year before; but BT says that next year’s charge will rise to ?750m. In addition, OfTel restrictions constrain the company to make further price cuts this year; these are expected to amount to around ?700m. As for areas for future profit growth, British Telecom will continue its focus on inland telecommunications. We British use our phones five times less than our American cousins, and Hepher promises more effort… to sell telephony as a consumer product. The company’s Winback programme to recapture customers from competitors represented around ?200m in regained business, almost all Mercury and predominantly business, and this, combined with the Options range of discounts, slowed BT’s reduction in business market share to 2.5% from 5% a year and helped maintain its 98% share of the residential market. However, the company admits that this dominance is being slowly eroded by the cable television companies. Elsewhere, Sir Iain sees potential growth in the convergence of telecommunications with entertainment and computing, and feels BT is well placed. On the regulator’s decision not to let the company broadcast entertainment, Sir Iain wryly commented: governments can change their minds in time, and governments change in time!
