BT gains from cost-cutting programme as first-quarter profits climb 17 per cent

BT lifted profits 17 per cent between April to June as its cost-cutting plan continued to pay off, in what the group's chief executive called an "acceptable" start to its financial year.

BT faced down potential strike action earlier this month and also announced it was to start offering customers Sky Sports content. There was more good news in its first-quarter numbers yesterday as pre-tax profits hit £446m, up from £382m in the corresponding period a year earlier.

Ian Livingston, BT's chief executive, said: "We have made an acceptable start to the year, delivering improved financial results while investing in the future of the business."

Revenues declined 4 per cent from £5.2bn in the first quarter of 2009 to £5bn this year. Yet, the group's operating costs fell 6 per cent to £4.4bn, principally due to reductions in labour costs. Robert Grindle, an analyst at Deutsche Bank, said the results were "solid".

While the City raised fears over how the Government's cuts could affect the group, BT reiterated its outlook for the full year "despite the challenging environment", Mr Livingston said. Government contracts make up 10 per cent of group revenues, and BT said the cuts posed an "opportunity and a challenge". Mr Grindle added: "The challenges of government contracts are real."

The company added 96,000 new customers to its broadband service during the quarter, which has increased since the launch of its fibre-based broadband product "Infinity" in January.

Mr Livingston backed a solid performance at BT's Global Services division, which had dragged the group to a full-year loss in 2008. While revenues at the division declined 3 per cent, the group's head said: "In BT Global Services we continue to win significant contracts due to our ability to deliver a world-class service to our customers."

The group surprised analysts over its free cash flow. While the research houses had predicted £100m of outflows, it actually recorded an inflow of £415m because of "the improved profitability and lower capital expenditure".

The issue of the pension still looms over BT. The group proposed a plan in February to plug the deficit, which was then valued at £9bn. The Pension Regulator rejected the plan and it remains under review. Yet BT revealed that the deficit now stands at £6.6bn following a recovery in the equity market.

BT is also awaiting the result of a case in the High Court, over the Crown guarantee. The case revolves around whether the Government would cover BT's pensions if the company were to go bust.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk