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.

PROMOTED VIDEO
News
ebooksNow available in paperback
Arts and Entertainment
Kieron Richardson plays gay character Ste Hay in Channel 4 soap Hollyoaks
tv

Regular cast member Ste Hay, played by Kieron Richardson, is about to test TV boundaries

Life and Style
tech
Life and Style
techPerils of 'text neck' revealed
News
i100
News
Stonewall CEO Ruth Hunt
peopleStonewall boss says many fear it could ruin their careers
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

SThree: Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

Ampersand Consulting LLP: Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Carlton Senior Appointments: Director, Private Bank - San Francisco, CA

$175 - $200 per annum, Benefits: full benefits: Carlton Senior Appointments: P...

Carlton Senior Appointments: San Diego, CA – Tier 1 House - Senior MD FA

Not specified: Carlton Senior Appointments: Senior MD Financial Advisor - San ...

Day In a Page

Synagogue attack: Fear unites both sides of Jerusalem as minister warns restoring quiet could take 'months'

Terror unites Jerusalem after synagogue attack

Rising violence and increased police patrols have left residents of all faiths looking over their shoulders
Medecins sans Frontieres: The Ebola crisis has them in the headlines, but their work goes far beyond West Africa

'How do you carry on? You have to...'

The Ebola crisis has Medecins sans Frontieres in the headlines, but their work goes far beyond West Africa
Isis extends its deadly reach with suicide bombing in Kurdish capital

Isis extends its deadly reach with suicide bombing in Kurdish capital

Residents in what was Iraq’s safest city fear an increase in jihadist attacks, reports Patrick Cockburn
Underwater photography competition winners 2014 - in pictures

'Mysterious and inviting' shot of diver wins photography competition

Stunning image of cenote in Mexico takes top prize
Sir John Major: Negative West End portrayals of politicians put people off voting

Sir John Major hits out at theatres

Negative West End portrayals of politicians put people off voting
Kicking Barbie's butt: How the growth of 3D printing enabled me to make an army of custom-made figurines

Kicking Barbie's butt

How the growth of 3D printing enabled toy-designer to make an army of custom-made figurines
Will Smith's children have made waves with a gloriously over-the-top interview, but will their music match their musings?

What are Jaden and Willow on about?

Will Smith's children have made waves with a gloriously over-the-top interview, but will their music match their musings?
Fridge gate: How George Osborne keeping his fridge padlocked shows a frosty side to shared spaces

Cold war

How George Osborne keeping his fridge padlocked shows a frosty side to shared spaces
Stocking fillers: 10 best loo books

Stocking fillers: 10 best loo books

From dogs in cars to online etiquette, while away a few minutes in peace with one of these humorous, original and occasionally educational tomes
Malky Mackay appointed Wigan manager: Three texts keep Scot’s rehabilitation on a knife-edge

Three texts keep Mackay’s rehabilitation on a knife-edge

New Wigan manager said all the right things - but until the FA’s verdict is delivered he is still on probation, says Ian Herbert
Louis van Gaal: the liberal, the enemy and... err, the poet

Louis van Gaal: the liberal, the enemy and... err, the poet

‘O, Louis’ is the plaintive title of a biography about the Dutchman. Ian Herbert looks at what it tells us about the Manchester United manager
Isis in Iraq: Baghdad hails the retaking of the Baiji oil refinery as the start of the long fightback against the Islamist militants

Isis takes a big step back

Baghdad hails the retaking of the Baiji oil refinery as the start of the long fightback against the Islamist militants
Bill Cosby: America’s beloved TV ‘dad’ or serial rapist?

Bill Cosby: America’s beloved TV ‘dad’ or serial rapist?

Ukip silk bow ties, Green Party T-shirts, and 'Iron Baby' romper suits: How to shop politically

How to shop politically

Ukip silk bow ties, Green Party T-shirts, and 'Iron Baby' romper suits
The science of sex: What happens when science meets erotica

Sex on the brain

Fetishes, dominatrixes, kinks and erotica. They are subjects that should get the crowds flocking to a new exhibition at the Wellcome Collection