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November 13, 2009

BT Q2 revenue down 3% to £5.1 billion

Expects total cost reductions of £1.5 billion for full year

By CBR Staff Writer

Telecoms operator BT Group has reported revenue of £5.12 billion for the second quarter of 2009, compared to £5.3 billion for the same period last year. Revenue decreased 3% including favourable foreign exchange movements and the impact of acquisitions of £118m.

Ian Livingston, chief executive of BT, said: “We have had another quarter of progress but there remains a lot more to do. With total cost reductions of over £900m in the first half, we have made significant headway towards our previous target of well over £1 billion for the full year. We now expect to generate at least £1.6bn of free cash flow this year, compared with our previous target of over £1 billion.”

For the quarter ended September 30, 2009, EBITDA decreased by 2% to £1.3 billion, compared to £1.4 billion for the same period last year. However, adjusted EBITDA increased by 2% to £1.44 billion.

The company posted an operating profit of £550m, down 15% compared to £648m in the same period last year. Operating costs decreased by 3% to £2,024m. Its pre-tax profits fell 44% to £275m in the second quarter of 2009, compared to £494m for the same period last year.

BT Global Services revenue decreased by 3% to £2.02 billion, due to economic conditions, lower wholesale call volumes in continental Europe, mobile termination rate reductions, continued decline in UK calls and lines and a decline in equipment sales.
For half year 2009, revenue was down 1% to £10,357m, including favourable foreign exchange movements and the impact of acquisitions of £314m. Excluding these, underlying revenue decreased by 4%. Adjusted EBITDA decreased by 1% to £2,807m.

Mr Livingston, said: “We are investing in the future of the business with an enhanced and accelerated programme of fibre deployment and wider roll out of faster broadband speeds, all within our capital expenditure plans. Given our operational performance, we expect to increase dividends by around 5% for the full year.”

BT said that it forecasts full-year revenue to decline by 3-4%, revising its previous forecast of 4-5% decline. It expects capital expenditure to reduce to around £2.6 billion and total underlying cost reductions are expected to be at least £1.5 billion.

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