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November 17, 1988


By CBR Staff Writer

British Telecommunications Plc yesterday posted a solid set of results for the half year to September 30; profits were up 9.2% at UKP1,239m despite a price freeze that has been in effect since November 1986. Oftel has insisted that price increases remain 3% below the rate of inflation since British Telecom was privatised nearly four years ago, and that figure will be changed to 4.5% below the retail price index next year. British Telecom has therefore had to rely on increased turnover and better margins to maintain profits, and it repeats that it intends charging customers for directory enquiry calls, which are estimated to cost British Telecom between 30p and 40p each. While there was a 3% increase in staff in the last 12 months, it was pointed out that productivity increased by 10% in the UK and 15% overseas. As expected there was a fall in overseas profit growth, which enjoyed a healthy 27% increase last year, but the fall was offset by increased profitability in the domestic market during the six months. There was also solid growth in sales and services, which includes everything from leasing of private circuits to Yellow Pages, as well as British Telecom’s 60% interest in the Cellnet cellular telephone network. Cellnet, which has been operating profiability since last year, saw a substantial increase in profits, and now claims nearly 50% of the UK market. There were 246 new digital exchanges installed during the half year, with an extra 1.1m customers connected to digital exchanges. Looking to the future the British Telecom CT2 Telepoint cordless consortium, which includes STC Plc, Nynex Corp and France Telecom, demonstrated a prototype Telepoint system at Euston Station on Monday, and is confident of obtaining a UK licence in a few months’ time. The investment required to establish a nationwide Telepoint network was described as considerable, but should not bother British Telecom which invested UKP1,244m in modernising its network in the six months. The company believes it can sustain its overall rate of growth: with inflation running at 6%, prices have actually fallen in real terms over the last couple of years and will continue to do so, while there has also been a growth in the number of services it is now offering. The board was reluctant to comment on Wednesday’s proposed takeover of Plessey by GEC and Siemens. It said that at the time it had been in favour of the merger of GEC and Plessey’s telecommunications interests, but would await developments; it did however admit that Siemens was at present only a small supplier to British Telecom.

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