Call boom sends BT shares soaring

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The Independent Online
SHARES IN British Telecom yesterday soared by 11 per cent as booming demand for Internet access and calls to mobile phones helped the telecom operator post its best growth figures for eight years.

In the three months to last December, BT generated a pre-tax profit of pounds 858m on revenues of pounds 4.68bn. Although this was a drop on the same period of 1997, the figures were skewed by the exceptional pounds 273m payment BT received from MCI after the US telecom group broke off merger discussions. On an underlying basis, earnings per share grew by 11.9 per cent - the largest quarterly rise since 1990.

The growth, which was ahead of City expectations, helped ease fears that BT's domestic business would suffer in a slowing economic environment.

"This quarter highlights that BT's UK growth potential is perhaps greater than the market had expected." said Alan Lyons, telecoms analyst at ABN AMRO Hoare Govett.

Sir Peter Bonfield, BT's chief executive, said domestic call traffic had increased by 8 per cent in the quarter, a rise from the 6 per cent growth seen in the three months to September. International call volumes also increased to 9 per cent, helped by an average 10 per cent drop in call charges.

Sir Peter also pointed to the growth in BT's mobile operations around the world. The company has investments in 10 mobile phone operators including a 60 per cent stake in Cellnet, the UK's second-largest mobile group, with a combined customer base of 13m.

As expected, however, BT's overseas operations continued to lose money. The company's share of losses in its associates in Continental Europe rose came to pounds 71m in the final quarter of last year, down from pounds 83m in the same period of 1997.

BT claimed it was still confident that the regulatory authorities would give its proposed joint venture with AT&T the go-ahead. Reports from the European Commission in Brussels last night said the two companies had offered to sell assets in the UK in an attempt to gain approval for the deal.

Sir Peter said he was "disappointed" at the Government's decision to delay the auction of the third-generation mobile phone licences, announced earlier this week. He also questioned whether it was technically feasible to split the available spectrum into five licences, suggesting that technical hitches might cause problems. "This is a brand new standard and there is a lot of radio work going on."

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