Sunday 28 December 2014

Strong demand for broadband boosts BT

Kate Holton

Published 01/02/2013 | 10:35

STRONG demand for broadband and tight cost control helped Britain's BT offset the combined pressures of regulation and recession to post a better-than-expected 7pc rise in third-quarter pre-tax profit.

In a continuation of the strategy that has sent shares in the group to a near five-year high, BT said it had recorded profits in the three months to Dec. 31 comfortably ahead of forecasts, off revenues that were down by 6pc.

The news sent shares in the group up 4.6pc, topping the FTSE 100 leader board and giving the group a market value of €20.5bn.

The group was boosted by demand for broadband, both at the retail level directly to customers and in wholesaling the service to rivals, as an increase in the number of engineers it employs helped the group to rebound from the previous quarter which was hit by rain.

The group said it had now become the biggest fibre broadband network in Britain, overtaking Virgin Media, after it passed 13 million homes with the technology.

More than a million of its customers are now using fibre and the group hopes that the imminent launch of its BT Vision sports channels with Premier League soccer and rugby will encourage others to upgrade to the faster and more expensive product.

"More than 13 million premises can access our fibre broadband and we are passing around 100,000 additional premises every week," Chief Executive Ian Livingston said.

"Take-up is growing strongly ... (and) this gives us an excellent platform for our push into TV and sport later this year."

The tight focus on costs and underlying improvement in trading has helped BT regain investor confidence in recent years.

Total operating costs were down by more than £1bn the last nine months alone, as the group improved terms with suppliers, used fewer contractors and third-party sources and benefited from improvements to the network.

That helped lift third quarter adjusted profits by 7pc to £675m, some 7pc ahead of consensus at £632m.

Group revenues, hit by regulation and economic pressures in Britain and Europe where it serves multinational corporations, were down 6pc.

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