BT soars 71 per cent on broadband gains

BT posted a bumper 71 per cent boost in profits and slashed its pensions deficit during its past financial year, although the group did not predict a return to growth until 2013.

The UK telecoms giant showed it had firmly shaken off the woes of two years earlier when it tumbled to a full-year loss, as it posted pre-tax profits of £1.7bn in the 12 months to the end of March.

The chief executive Ian Livingston said BT had "delivered on profits and free cashflow ahead of expectations for the year, while making significant investment in the business for the future".

Growth was driven by a strong performance in its broadband business, adding the most new customers to its fibre-based broadband package in eight years. "We have consolidated our position as the leading provider of broadband in the UK," Mr Livingston said.

The company is carrying out "one of the most rapid" deployments of superfast broadband in the world, the chief executive said. It is adding 80,000 premises a week to its network, and it has announced plans to double download speeds to around 80Mb. BT's so-called Infinity broadband package, which competes with Virgin Media, now has 144,000 subscribers and is growing at around 5,000 a week.

Yet, the group saw revenues decline 4 per cent to £20bn during the financial year. The drop slightly missed market expectations, sending the shares down 1.4 per cent to 199p. Management said the revenues could fall further this year, by up to 2 per cent, before returning to growth in 2013.

The revenue decline was offset by the company's cost-cutting drive outstripping its targets. Management had budgeted for cuts of around £900m, but they actually came in at £1.1bn.

Morten Singleton, an analyst at Investec, said there was "more to come from the cost-cutting" and BT's forecast of a return to growth "should help to convince the sceptics there is more to this stock than profit growth being based on, ultimately unsustainable, cost-cutting".

BT's problems in the year to the end of March 2009 stemmed from what the chief executive called at the time an "unacceptable" performance at its Global Services Division.

The performance of the division that manages networks and IT outsourcing for multinational corporations, sent the group tumbling to a £134m loss after making more than £1bn the previous year. It forced a cost-cutting drive, which included axing 30,000 jobs.

Yet, the group announced yesterday that the division had become cashflow positive a year earlier than expected, and its order intake had risen a tenth to £7.3bn. Analysts at Megabuyte said the results "cap a year of further solid progress for BT, lifting earnings before interest, taxation depreciation and amortisation back above levels prior to the 2009 crisis".

There was more good news for the group over its pension deficit, an issue that has weighed heavily on the shares. BT reported yesterday that the deficit stood at £1.8bn, compared with £5.7bn a year earlier. Net debt also fell in 2010, by £467m to £8.8bn.

In February last year, BT agreed a 17-year plan to pay off the black hole in its scheme with the trustees of the BT Pension Scheme. However, the Pensions Regulator said it had "substantial concerns" with parts of the agreement. The review has now been put on hold and is likely to report next year.

The independent pensions expert John Ralfe said the reduction in the deficit was partly down to technical reasons, including BT's decision to calculate annual pension rises using CPI inflation rates rather than RPI.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Voices
A mother and her child
voices
Voices
The veterans Mark Hayward, Hugh Thompson and Sean Staines (back) with Grayson Perry (front left) and Evgeny Lebedev
charity appealMaverick artist Grayson Perry backs our campaign
News
Tax now accounts for ‘nearly 80%’ of the price of a bottle of whisky
news

Arts and Entertainment
Peppa Pig wearing her golden boots
film

"Oink! Oink! Hee hee hee!" First interview with the big-screen star

Life and Style
tech

Biohacking group hopes technology will lead people to think about even more dystopian uses

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

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee