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November 11, 1994


By CBR Staff Writer

British Telecommunications Plc continues to complain about the effects of regulators enforced tariff cuts on its turnover but says a strengthening UK economy combined with its own vigorous advertising campaign is maintaining growth in turnover. Cuts in call tarriffs enforced by the regulator Oftel cost the company between UKP4m and UKP5m a year in lost turnover, said British Telecom’s Robert Bruce, following the announcement of the companies half year figures. By the end of this financial year British Telecom estimates reduced call charges will have lost the company around UKP1,500m. The effects are being felt in a number of areas. Despite a 7% increase in inland calls income in this area fell 2.8%. Turnover from international calls also dropped, down 3.1%. This is accounted for by cuts in call tariffs, increased competition and a reduction in transit calls, says British Telecom. In a downbeat announcement chairman Sir Iain Vallence said the half year results were sound but predicted that further redundancies and increasing cuts in call tariffs will make larger cuts into second half results. Since April this year BT has cut 4,400 jobs as part of its redundancy programme, costing the company UKP151m. Another 10,600 jobs are planned to go in the next six months. The growth of mobile communications, including Cellnet Mobile Communications Ltd, of which British Telecom owns 60%, was phenomenal, according to Michael Heffer, with turnover up 40%. The results include the UKP2,860m British Telecom invested in aquiring 20% of MCI Communications Inc which was completed on September 30. The companies have jointly set up Weston, Virgina-based Concert Communications which has already signed 75 new customers and earned UKP200m, say British Telecom. Over the next half year, the company plans to sell the the 35.8m AT&T Corp shares that were converted from its 17% interest in McCaw Cellular Communications when AT&T completed acquisition of the firm on September 19. The shares are corrently valued at $1,900m, but it has yet to decide how the sale will be made – but an underwritten secondary offering seems likely.

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