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February 16, 1989

CHATLINE CHATTER DOMINATES BRITISH TELECOM’s THIRD QUARTER MEETING

By CBR Staff Writer

British Telecommunications Plc has released its third quarter figures to December 31 1988, reporting pre-tax profits up 7% to UKP623m, turnover 7.8% to 2,790m; earnings per share 10% at 6.6p preference dividends for the nine months of UKP2m were UKP30m lower than last year, following the redemption of preference shares which served to increase the earnings per share figure; the company says that without the redemption, growth would have been nearer 9%. The figures are steady compared to the bouyant six months to September 1988, when profits grew by 9.2%; the company points to the performance of the UK economy, and the telephony charges freeze, in place since November 1986, which will continue until August 1989. British Telecom has been subject to a charge limit of 3% below the retail price index since privatisation, and this figure will change to 4.5% below in August. Increased spending on digitalisation, cable and computer systems contributed to a record capital expenditure level of UKP2,000m in the nine month period; one million additional digital lines are now being installed per quarter, and the digitalisation programme should be complete by the mid-1990s – staffing numbers should be relatively stable till this time. Annual costs of UKP160m for directory enquiries means that a charge will be placed on the service; the company also identifies an imbalance between costs and revenues in its rental businesses. Inland call income grew by 10%, compared to 14% on the international front. British Telecom is particularly hopeful for future profit growth in its cellular business, reflected by the recent purchase of 22% of McCaw Cellular Communications Inc for $1,500m (CI No 1,098); Telecom hopes the Seattle, Washington firm will be profitable by the middle of the next decade. Plans to improve services in 1989 include the provision of rebates for late installation of telephone lines, and compensation of up to UKP5,000 for businesses, and UKP1,000 for residential users, for such delays. In other words, little excitement at the meeting called to discuss the figures, which was dominated by the man the man from the Daily Mirror and A N Other competing to ask unhelpful questions about Chatlines.

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