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
Bryan Cranston as Walter White, in the acclaimed series 'Breaking Bad'
news
News
Those who were encouraged to walk in a happy manner remembered less negative words
science
Sport
footballChelsea 6 Maribor 0: Blues warm up for Premier League showdown with stroll in Champions League
Arts and Entertainment
Princess Olga in 'You Can't Get the Staff'
tvReview: The anachronistic aristocrats, it seemed, were just happy to have some attention
News
Renee Zellweger as Bridget Jones
i100
Life and Style
tech

Board creates magnetic field to achieve lift

News
ebooksAn unforgettable anthology of contemporary reportage
News
There have been various incidents of social media users inadvertently flouting the law
news

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
News
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
i100
Sport
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Environment
Sudan, the last male northern white rhino
environmentThe death of a white northern rhino in Kenya has left the species with a single male. These are the other species on the brink
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

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells