BT has reported an increase in profit and lower debts.
The UK incumbent has now won an army of fans in the financial community for its concentration on the bottom line. Chief executive Ben Verwaayen said, We are not looking for revenue growth, we are looking for profitable growth.
On a comparable basis, net income in the first quarter rose net income rose 40.2% to GBP331 million on revenue 0.9% higher at GBP4.77 billion. For the year, net income increased 65.2% to GBP1.2 billion on revenue that rose 1.5% to GBP18.7 billion.
The actual figures present a totally different picture because they cover a period when BT exited its Concert alliance with AT&T, de-merged its mmo2 mobile arm and sold off substantial assets to cuts its debt burden.
They show that in the fourth quarter to March 31, net income was GBP1.6 billion, up from a loss of GBP2.59 billion on revenue 0.9% higher at GBP4.7 billion. For the year, net income was GBP2.68 billion, up from income of GBP995 million on revenue 8.9% lower at GBP18.7 billion.
As BT is now viewed as a rather dull if profitable utility, there have been extensive rumors that it would seek to buy back its former mobile arm mmo2, to ensure strong annual growth. However, Mr Verwaayen indicated that BT is intent on becoming a virtual mobile operator. You don’t need to own the mobile operator to be able to bundle for your customers, he said.
The one shadow hanging over the UK incumbent is a GBP6.3 billion pension fund deficit. However, the company’s net debt, which led to the departure of the previous management teams, fell GBP4.4 billion over the year and now stands at GBP9.6 billion pounds. BT’s previous problems at its Global Services division also seem to have turned around – the business finally achieved operating breakeven at all its European units. Overall, the company showed a strong performance – it’s just a shame that its progress is likely to be overshadowed by debate over its pension fund position.
