BT profits from lower costs
BT grew pre-tax profits 30% in calendar 4Q10 as cost cutting measures offset an overall decline in revenues.
Profits hit £531 million (€626 million) during the period – the operator’s fiscal third quarter – enough to grow earnings per share 32% year-on-year to 5.4 pence.
However group revenues fell 3% to £5 billion as sales at the firm’s Global Services and Retail divisions declined 7% and 3% respectively, with revenues at the Wholesale and Openreach businesses flat on calendar 4Q09.
While cuts to wholesale termination fees is mostly to blame for the revenue fall, the changes were a double-edged sword – cutting BT’s outlay to other carriers 12%.
Despite the lower revenues, BT grew EBITDA 7% to £1.48 billion as it pared back operating costs 5% to £4.4 billion, and cut labor costs 3% to .£1.4 billion.
The EBITDA figure came in marginally ahead of the £1.45 billion predicted by analysts polled by Bloomberg.
The firm’s pension scheme continued to be burden, though it cut the deficit from £3.8 billion at end-September to £2.7 billion by end-December.
Chief Ian Livingston was realistic in his assessment of the results, noting that profits and cash flow were higher than in calendar 4Q09, and that the firm took its highest share of DSL net additions for eight years in the most recent quarter.
“These results show that we are making progress on a number of fronts. There is always more to do but our performance underpins our outlook for this year and the period to 2012/13,” he states.
The operator predicts its Global Services division will record a positive cash flow of £100 million in the current fiscal year – a year ahead of schedule.