Lower regulatory charges, cost cuts and strong demand for a wide range of services enabled Britain's BT to post solid third-quarter core earnings on Friday and lift aspects of its forecasts.
BT, which has offset falling revenues in recent years by deep cost cuts and an improving operational performance, said revenues for the three months were down five per cent but that earnings and cash generation remained good.
The group said it now expects to exceed its target of £6bn of adjusted core earnings a year early and it also lifted its expectations for free cash flow to around £2.4bn, from an earlier forecast of £2.2bn.
"We have delivered another quarter of growth in profits and cash flow despite the economic headwinds," Chief Executive Ian Livingston said.
The group posted third-quarter revenues down five percent to £4.77bn, broadly in line with forecasts. When excluding transit revenues which pass through the business and do not affect profits, revenues were down 3 percent. This was below the previous quarter but due to timing issues on certain contracts.
Due to continued strong cost control, core earnings were up three per cent to £1.5bn, also in line with forecasts.
Amongst the highlights within the group was demand for broadband, with 146,000 new retail broadband customers, representing 56 percent of the market of net additions.
On the pension front, on an IAS 19 basis, the deficit was £4.1bn net of tax at the end of December, compared with a deficit of £2.5bn at the end of September.
Investors and analysts are likely to be looking at the group's pension situation particularly closely this quarter, as a new triennial review began at the end of 2012, which could lead to a review of how much the group pays into the scheme.
