BT has posted a 43% fall in first quarter net profit of €250 million, down from €445 million a year ago.
Sales rose by 1.1% to €6.1 billion however beating analysts pessimistic forecasts of an average profit of €132 million on sales of €5.88 billion. EBITDA dropped 2.4% to €1.5 billion in the first quarter again an improvement of analysts forecasts of €1.47 billion.
The market welcomed the result, after recent underperforming quarters with BT shares soaring 12.2% on the news, topping the FTSE 100.
In May BT management warned that there would be a drop in sales this year due to lower mobile termination rates and costs associated with reinvigorating global services offerings. It also foreshadowed that culling of 15,000 jobs in the year ahead with 30% coming from the global services unit.
BT CEO Ian Livingstone said “BT Global Services is making progress although there is still much to do. The rest of the group continues to perform well, generating EBITDA growth of 6% ”.
The global services unit, which brings in around 40% of the carrier’s total revenue delivered an EBITDA decline of 66% to €72 million BT’s wholesale unit, dropped 1.2% to €373 million.
Livingstone added that the company was on track to cut costs and capital expenditure by over one billion pounds and “to generate group free cash flow of over 1 billion pounds this year.” The carrier reported that through renegotiating contracts and merging operations, it had already achieved €417 million in savings. The CEO also reiterated that sales will drop between four and five percent this year.
Meanwhile, France Telecom also delivered better than anticipated first-half operating revenue but warned of a slowdown in second half activity and increasing cost pressure due to regulatory decisions.
France Telecom CEO Didier Lombard forecast "for the second half, with the economic environment remaining difficult, the group will continue with targeted marketing programs and cost-reduction efforts. We are confident we can adjust to current conditions while preparing to take maximum advantage of the recovery when it occurs."
The group confirmed its 2009 target for organic free cash flow of €8 billion after it generated €4.1 billion in the first half.
Q1 EBITDA came in at €8.821 billion beating the average analyst forecasts of €8.641 according to Reuters.
