Broadband competitors put the squeeze on BT

BT expects to unseat NTL as the UK's largest broadband provider over the coming months after reporting that it has three million high-speed internet customers.

The telecoms company is feeling the heat of competition in the broadband market after companies like Orange, Sky and Carphone Warehouse started offering free broadband to subscribers. As a result, BT's share of new customers in the broadband market fell to 25 per cent from 30 per cent over the summer after it added 626,000 users.

However Ben Verwaayen, BT chief executive, said the slip only equates to a 0.16 per cent loss in market share and that quarterly new customer statistics tend to fluctuate. He noted that cable companies like NTL only accounted for 11 per cent of new broadband customers over the summer.

A BT spokesman added: "It's fair to say there's been a fight for customers these last few months. BT's market share has held up well however and so it is not our blood that is on the carpet. We have now passed the three million mark and we are well set to become the UK's most popular supplier of broadband." He added that BT's share of the overall broadband market, including cable, is identical to what it was a year earlier.

Mr Verwaayen said that almost 60 per cent of BT's new broadband customers opted to pay for higher-priced packages. "I think there will be hundred of internet service providers in the future. Some will differentiate themselves on content, some on service capability and some on price," Mr Verwaayen said.

BT also said that it will announce cuts to its wholesale prices next week with the reductions due to feed through to its customers, typically smaller internet providers, next year.

The company also revealed that it would launch its new television service BT Vision next month. The company will look to gradually add customers to the service before a full launch around May next year. To bolster its offering BT has signed up Disney to provide content for its video-on-demand service. The deal means BT can sell movies.

BT's success in the broadband market, combined with strong progress in its IT services division, pushed revenue up 4 per cent to £4.9bn in the three months to the end of September. Profit before tax and the cost of staff retiring increased 12 per cent to £665m.

BT expects to publish the findings of its tri-annual pension review by the end of the year. Earlier this week pensions consultant John Ralfe said that the company could be underplaying the size of its deficit. Mr Ralfe said that BT has not adopted the same life expectancy assumptions as the Royal Mail.