BT profits better than expected

UK-headquartered telecoms giant BT posted better-than-expected quarterly profits today with the number of broadband customers surging as they took up superfast connections.

UK-headquartered telecoms giant BT posted better-than-expected quarterly profits today with the number of broadband customers surging as they took up superfast connections.

The group added 166,000 new gross retail broadband customers in the three months to September 30, a 46% jump on a year ago, taking its total number to six million.

BT signed 88,000 out of these new users to its Infinity superfast service, which the telecoms giant said had now doubled its number of users to 300,000 in the past six months.

The company said its revenues per user in retail rose by £5 to £335, reflecting the growth in broadband, which helped offset a decline in revenues on its traditional landline telephone business.

BT said group adjusted pre-tax profits increased by 15% to £570m, compared to market forecasts of about £550m.

The retail business was also boosted by BT Vision, the firm's video and TV on demand service, which had its best quarter for two years with a net addition of 41,000 users, taking the total to 640,000.

BT Ireland said revenue for the period, excluding foreign exchange movements, was broadly flat despite the challenging economic environment.

"BT Ireland’s fibre roll-out in Northern Ireland has now reached around three-quarters coverage with almost 600,000 premises passed and Derry has become the first city in the UK to have all cabinets upgraded to fibre," a statement said.

"Our fibre-based transmission network in the Republic of Ireland is now operational with its first corporate customer.

"Capital expenditure (in the BT Retail division) increased by 10% reflecting the investment in broadband in the UK and in fibre-based transmission in the Republic of Ireland.”

Elsewhere, the formerly troubled global services division cut losses from £41m to £31m over the quarter, helped by new contracts with electronics retailer Best Buy to connect 820 stores and also with a large financial brokerage in Asia.

Wholesale was hit by the reduction in mobile phone call termination charges but was flat otherwise, while network arm Openreach increased its profits contribution by 5% as it continues its fibre roll-out across the UK.

BT said that recent market turbulence had affected its pension fund, with the deficit rising to £2.5bn after tax from £1.4bn at the end of March.

For the half year, BT posted profits of £1.1bn with the interim dividend increased by 8% to 2.6p.

Chief executive Ian Livingston said that the group had continued to offset the current economic headwinds through better customer service, efficiency and investment and added that the outlook for the year remains unchanged.

Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said that the reiteration of full-year guidance was well received, underpinned by the strength in broadband and Global Services.

“As investors look towards strong, cash generative companies with a decent yield, BT has served up a reminder of why it should be considered,” he added. Shares rose 3% in early trading.

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