BT Boosts Q4 Revenue on Strong Broadband Sales

BT Group increased its revenue by 7 percent in the first three months of the year on the strength of new broadband accounts and other networked IT services, the company announced Thursday.

Revenue for its fiscal fourth quarter was 5.1 billion pounds (US$8.9 billion as of March 31, the last day of the period reported), up from 4.8 billion pounds in the same period last year. The 7 percent jump included gains from acquisitions. Without those, revenue climbed 5 percent, BT said.

Revenue from “new wave” services, including broadband, networked IT and mobile services, climbed 28 percent to 1.9 billion pounds. This offset a decline of 3 percent in BT’s more traditional businesses, including fixed-line voice services.

Net income for the quarter fell to 227 million pounds, from 314 million pounds in the corresponding period in 2005, according to U.S. generally accepted accounting principles. However, earnings before interest, tax, depreciation and amortization, and before specific items and staff leaving costs rose 1 percent to 1.5 billion pounds, BT said.

The numbers show that BT is “firing on all cylinders,” the company said. The U.K. company is confident it can grow its revenue and earnings per share over the coming year, it said.

BT is in a tough spot because, unlike many other European telecom operators, it doesn’t have a big mobile business, making it especially vulnerable to declines in its fixed line business, Ovum analyst Mike Cansfield said in a research note. The fact that it grew revenue by 7 percent in these conditions shows why its management is so upbeat, he said.

But the lack of a strong mobile business makes it hard for BT to capitalize on demand for converged, fixed line and mobile services, which are popular among international businesses. This could significantly limit its long-term growth, Cansfield said.

BT will be looking to its new-wave services to make up for any gap in its offerings. It added 2.9 million wholesale broadband connections during the year, for a total of 7.9 million on March 31, it said.

Revenue from both consumers and small businesses declined during the quarter, by 4 percent and 2 percent, respectively. Revenue from big businesses climbed 14 percent, with much of that from broadband and networked IT services.

BT is pushing ahead with its 21st Century Network project, which will convert its public switched telephone network to an IP-based system. It will begin testing voice services over the network later this month, and expects the first operations to go live in Cardiff in November.

-James Niccolai, IDG News Service

For related news coverage, read BT to Blanket 12 U.K. Cities With Wi-Fi.

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