BT Profits Boosted By Strong Broadband Demand

BT Group Plc has reported a healthy set of third quarter figures, as the former UK incumbent signed up 188,000 additional broadband customers.

Financial speaking, BT posted a positive set of results. For the three months to December 31, BT recorded a 30 percent increase in pre-tax profits to £531 million, compared to £408 million in the year ago quarter.

Sales however suffered a 3 percent decline to £5 billion, as the UK carrier once again felt the pressure from a highly competitive call and landline sales market.

Broadband Success

“Profits and cash flow in the quarter were ahead of last year,” said chief executive Ian Livingston. “BT Retail had a good quarter with growth in business revenues and our highest share of DSL broadband net additions for eight years. Openreach benefited from a stronger broadband market and growth in its copper line base. BT Global Services is now expected to be cash flow positive this year, a year earlier than targeted.”

“These results show that we are making progress on a number of fronts,” he added. “There is always more to do but our performance underpins our outlook for this year and the period to 2012/13.”

Livingston is certainly entitled to boast about BT’s broadband performance. During the last three months of 2010, a total of 356,000 broadband customers in the UK were added by various ISPs using BT’s network.

BT managed to sign up 188,000 of these customers, which represents an impressive 53 percent of all new broadband users.

Positive Trends

BT’s broadband TV service, BT Vision, recorded more modest growth with 40,000 new customers signed up, compared with 24,000 in the previous three months. This brought the total to 545,000, which is still tiny in comparison with the 10 million plus customer base of TV giant Sky.

“Despite revenue declines for its two biggest divisions, there were very positive underlying trends for both BT Retail and BT Global Services (BTGS),” said Ovum analyst Mark Giles. “BT Retail continues to post impressive broadband subscriber additions, and this quarter marked its highest market share of additions in the last eight years, while the stronger quarterly growth in BT Vision subscribers was also encouraging.

“BTGS is still the biggest of the four divisions and a powerhouse for the group, and BT highlighted some large multinational contract wins – Ovum’s global services contract report shows BTGS has maintained a strong position in the enterprise managed services market,” said Giles.

Tough Two Years

BT results come after a difficult period for the carrier. In May 2009 it announced that it was cutting 15,000 jobs in an effort to cut costs, although most of these were from employing fewer contractors and third parties.

Then in August 2009 BT announced it was cancelling its graduate recruitment programme, although it reinstated this in September 2010.

In October last year, however, BT added another 200 apprentice jobs, effectively doubling the number of roles it offers in its apprentice scheme, in order to help the carrier with its rollout of fibre services in the UK.

And of course BT has already pledged to spend £2.5 billion on fibre deployment in the UK. This superfast broadband network will reach an estimated 16 millions homes, mostly in towns and cities, by 2015.