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February 2, 2012

BT revenue down, profits up; announces new ultrafast fibre plan

BT appears to be weathering the dour economic conditions well on the back of cost cutting and an increase in fixed line broadband users.

By Vinod

The company announced its results for the third quarter to December 31st, despite reporting a 5% fall in revenue to £4,774m, the company’s profit was up 18% to £628m.

"We have delivered another quarter of growth in profits and cash flow despite the economic headwinds," said Ian Livingston, BT’s Chief Executive.

BT added 146,000 retail broadband customers, 56% of the total 262,000 UK connections made in the period. The company now claims a retail broadband customer base of 6.1m.

Take up of BT’s new super-fast broadband product, BT Infinity, increased with 95,000 customers added in the quarter, for a total of more than 400,000 customers.

"Our investment to support our customers and improve our services has resulted in new contract wins around the world, with orders so far this year up over 50% in Asia Pacific and Latin America. In the UK, our fibre roll-out has accelerated bringing super-fast broadband within reach of over 7m homes and businesses and we remain the number one broadband retailer with over 6m customers. Our fixed-line base has now grown for the last five quarters and our active consumer line loss is at its lowest for five years," Livingstone said.

The company boosted its cash flow by £65 to £634, reflecting the company’s lower capital expenditure and lower pension payouts, combined with restructuring and property sales.

The company is forecasting that it will reach its earnings targets for 2013 a year earlier, preserving £2.4bn in cash on the books.

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Ovum analyst David Molony is happy with the results which fell within industry expectations.

"There remain strong fundamentals within the business, in particular BT Retail which continued its impressive broadband growth, as well as making strong additions to its Vision and Infinity subscriber bases. However, it’s financials show how much of a challenge it faces in transforming its business, and why it’s so important for BT to continue to change its service mix. Openreach is delivering good results on the back of the company’s fiber investment. However, the main focus must remain on BT Retail and BT Global Services. BT must keep innovating to deliver faster broadband speeds and more enticing bundles for consumers, as well as developing Global Services’ capabilities through cloud services, professional services and further regional investment," Molony said.

The company’s Openreach division also announced it has begun its first trials of Fibre To The Premises (FTTP) ‘on demand’, a product which offers small and medium businesses the opportunity to extend fibre from the cabinet, right into their businesses. This would see speeds of up to 300Mbit/s available in the near future.

When it launches, this product will be made available anywhere in BT’s fibre footprint on customer request.The company is conducting further trials of FTTP on demand this Summer with a view to making the service commercially available to all communications providers by Spring 2013.

BT now claims that seven million of its customers can now access fibre broadband over its network, rising to ten million by FY 2012 and then to around two thirds of UK premises by the end of 2014. BT will also be doubling the speed of its standard fibre broadband to 80Mbps this spring.

The company also announced it will be bidding for Broadband Delivery UK funds to make fibre available to more than 90% of UK premises in conjunction with local government bodies.

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