BT profits nothing to phone home about

15-05-2008

by The Register

BT failed to increase profits this year, although turnover was up very slightly in the fourth quarter ended 31 March.

For the full year BT turned over STG20.7 billion, a 2 percent increase on 2007. But profit before taxation and specific items was STG2.5 billion -- no improvement on last year. BT did raise its EBITDA some 3 percent to STG5.8 billion. Earnings per share grew 5 percent to STG0.239 and BT will pay a dividend for the year of STG0.158 pence per share, also up 5 percent.

New wave revenue -- from broadband and IT services -- grew 9 percent to STG8.04 billion and traditional fixed line revenues fell by 1 percent.

Restructuring and redundancy payments cost BT STG110 million in the year.

The company also said it was changing the way it will introduce its next generation network 21CN. It was originally seen as a mass migration of customers which would later deliver new services, but BT now expects to provide new services from the outset. It said the programme had been expanded to focus more on software-driven services and extra demand for enterprise customers.

Later this year BT will introduce an "innovation platform" so that the telco and outside developers can develop new applications and services for the network.

BT Wholesale saw revenues for the year shrink 12 percent to STG1.18 billion. It blamed this loss on a STG97 million decline in low margin transit and premium rate services revenues and a STG54 million dip in broadband revenues caused by price cuts. The telco expects more ISPs to connect directly so low margin transit revenues will continue to fall.

BT shares were up very slightly -- half a percent -- Thursday morning but are down 28 percent on the year.

Chairman Sir Michael Rake credited outgoing CEO Ben Verwaayen with transforming BT's business. He will be replaced by current retail chief Ian Livingstone.

BT remains confident looking forward and expects to increase dividends in 2008/2009.

The Register and its contents are copyright 2008 Situation Publishing. Reprinted with permission.