BT 'stronger' after year of upheaval

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The Independent Online

BT boss Ben Verwaayen said the telecoms giant was in a "stronger financial position" today after a year of upheaval at the group.

The Dutchman, who joined BT in February, said the underlying performance of the business was improving as it looked to the future.

Underlying pre–tax profits in the final quarter of the group's financial year to March 31 were up 43% while turnover had grown by 5%.

Net debt had also been brought down to £13.7 billion, half the level seen a year ago as BT counted the cost of a costly acquisition spree.

Mr Verwaayen reiterated that his focus going forward was on improving customer satisfaction, cutting costs and introducing new services.

And he added: "In this way we will deliver real value to our shareholders and our customers."

But shareholders will receive a dividend payment of just 2p per share as BT returns to the dividend list for the first time in over a year.

The dividend payout, which totals £173 million, is significantly below City forecasts of between 3.2p and 3.4p.

BT has been transformed in the past year, selling a host of stakes in foreign firms and demerging its BT Cellnet mobile phone business, since renamed O2.

The group has also sold off its Yellow Pages division Yell, closed its Concert joint venture with AT&T, and launched a bumper rights issue of £5.9 billion.

Pre–tax profits for the year to March 31 fell to £1.27 billion before one–off costs, a drop of 27% but ahead of expectations.

Turnover edged ahead to £21.8 billion from £21.1 billion in the prior year.

Underlying earnings at BT's core residential phone business BT Retail rose to £1.3 billion from £1.1 billion.

The group said the introduction of BT Answer 1571 and BT Together had helped to stem the decline in customer numbers at the business.

BT took a £2.2 billion charge, however, to cover a write–down of assets at its struggling business services arm BT Ignite.

The European operations of BT Ignite, which sells voice and data systems to blue–chip firms, are now valued at just £750 million.

Chairman Sir Christopher Bland said: "It has not been an easy year but we have taken the hard decisions early and are now in a position of relative strength."