BT phones home with 48% profit rise

Not bad going, for a company that was on the rocks until recently. It's all in the cost-cutting, apparently.

by Emma Haslett
Last Updated: 25 Jun 2012
It wasn’t long ago that BT’s finances were in a dire shape, and the company was considered a bloated relic of a bygone era. So it’s always encouraging when the telecoms group reports a rise in profits. Cue this morning’s announcement that pre-tax profits for the three months to the end of December hit £652m, 48% higher than this time last year – although revenues did fall by 5% to £4.77bn. Still: not a bad performance, all things considered.

The company put the rises down to an increase in broadband users: having rolled out its super-fast fibre-optic broadband to encompass seven million homes, it’s added 95,000 customers which makes it, as CEO Ian Livingston pointed out, the UK’s ‘number one broadband retailer, with over six million customers’. Of course, that could all change: its new ad campaign, a Friends-esque ‘sitcom’ featuring three sullen student housemates, is enough to put anyone off…

Nevertheless: BT has clearly been hard at work cutting costs, which had been threatening to reach proportions unheard of by even local government. Labour costs apparently fell by 3%, while payments to other telecommunications operators (payments related to connections across other telecoms operators) fell by 15% because call volumes have dropped. Presumably that’s the only advantage it gets for having divested itself of BT Cellnet, its mobile phone arm, back in the late 90s.

The only slight spanner in the works was its pension deficit, which has risen to £4.1bn, thanks to the low returns it’s seen on corporate bonds. Apparently, that reflects ‘the impact of quantitative easing’. So it’s the Government’s fault, really…

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