BT stems customer defections and doubles broadband sales

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The Independent Online

BT Group revealed it was stemming the flow of customers defecting to rival operators yesterday, although its shares dipped 2 per cent on concern that its core business remained under pressure.

Announcing its first-quarter results to 30 June, the former telephone monopoly said it lost 100,000 customers in the three-month period ­ half the number that switched to an alternative telephone carrier during the previous three months.

The company is compensating for its shrinking market share in its old legacy business of fixed-line calls by chasing the "new wave" businesses of broadband, mobile communications and information systems. BT said underlying first-quarter revenues rose 0.8 per cent, excluding the impact of cuts in charges for calls from BT lines to mobiles, which it passes on to mobile operators.

Ben Verwaayen, the chief executive, said: "I'm not going to call this the inflexion point either way. ...But I have confidence that we are executing our plan and are in charge."

The group also showed sales from its "new wave" businesses jumped 32 per cent to £936m in the quarter, generating more than 20 per cent of group turnover. Its quarterly revenues for broadband services doubled to £186m, with 2.7 million customers taking up its packages. That gives it a 29 per cent market share, which Mr Verwaayen said "is not good enough". BT was aiming for a market share in the "mid-30s", he added.

Analysts were split over BT's progress. Chris Alliott, at Nomura, said: "This result will go some way to providing the market with the comfort it has been looking for that revenues at BT are beginning to stabilise."

But Christian Maher, at Investec, said: "On first glance the revenue performance is encouraging, but closer inspection reveals a lot of this came in wholesale, and that trends in consumer and business were under greater pressure than in the fourth quarter." BT shares initially rose 2 per cent, before ended down 4.25p at 190.25p.

A £102m bill for the 1,000 staff who left the business during the period hit pre-tax profits, which fell 16 per cent to £416m.

Separately, Telewest posted a second-quarter net loss of £126m yesterday but said it had seen a record take-up of its high-speed internet services. The cable group, which posted a net income of £5m a year ago, said operating income rose to £20m from £3m a year ago. It relisted in New York last week after a prolonged restructuring.