BT surprises the market as profits surge

Steve Dinneen
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BT shares jumped over three per cent yesterday after the telecoms giant unveiled better than expected results, buoyed by improvements at its Global Services division.

BT’s core profit rose seven per cent to £1.48bn in the last quarter of 2010, despite a three per cent sales decline, as it continued to slash costs.

Global Services’ sales fell seven per cent but its profit margin jumped an impressive 7.1 per cent. Technology research firm Ovum said the performance was surprisingly strong, with the division having undergone a massive restructuring.

Analyst Mark Giles said: “This is a huge bonus for the group – it shows it has cleared up some bad commercial deals very effectively.”

BT retail gained broadband market share in the quarter, adding 188,000 customers, or 53 per cent of new business in the sector. This was partly due to strong take-up of its BT Vision internet TV service, which more than doubled its quarterly uptake with 40,000 net additions.

But the division still reported its tenth successive quarter of consumer revenue decline, down four per cent, compared to business revenue up one per cent. Overall revenue at the division fell three per cent to £1.97bn from £2.02bn a year earlier. However, Ebitda jumped four per cent in the same period to £452m.

Chief executive Ian Livingston said: “Retail had a good quarter with our highest share of DSL broadband net additions for eight years. If you want cheap and cheerful, we’ve got it; if you want the best, we’ve got it.”

BT’s pension deficit, which in December 2008 stood at £9bn, fell to £3.7bn thanks to improvements in the market, a change to statutory accountancy methods and BT’s £525m annual contribution. The stock closed up 3.6 per cent at 184.9p.