BT profits better than expected

Telecoms giant BT posted better-than-expected quarterly profits today with the number of broadband customers surging as they took up superfast connections.

The group added 166,000 new gross retail broadband customers in the three months to September 30, a 46% jump on a year ago, taking its total number to six million.

BT signed 88,000 out of these new users to its Infinity superfast service, which the telecoms giant said had now doubled its number of users to 300,000 in the past six months.

The company said its revenues per user in retail rose by £5 to £335, reflecting the growth in broadband, which helped offset a decline in revenues on its traditional landline telephone business.

BT said group adjusted pre-tax profits increased by 15% to £570 million, compared to market forecasts of about £550 million.

The retail business was also boosted by BT Vision, the firm's video and TV on demand service, which had its best quarter for two years with a net addition of 41,000 users, taking the total to 640,000.

Elsewhere, the formerly troubled global services division cut losses from £41 million to £31 million over the quarter, helped by new contracts with electronics retailer Best Buy to connect 820 stores and also with a large financial brokerage in Asia.

Wholesale was hit by the reduction in mobile phone call termination charges but was flat otherwise, while network arm Openreach increased its profits contribution by 5% as it continues its fibre roll-out across the UK.

BT said that recent market turbulence had affected its pension fund, with the deficit rising to £2.5 billion after tax from £1.4 billion at the end of March.

For the half year, BT posted profits of £1.1 billion with the interim dividend increased by 8% to 2.6p.

Chief executive Ian Livingston said that the group had continued to offset the current economic headwinds through better customer service, efficiency and investment and added that the outlook for the year remains unchanged.

Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said that the reiteration of full-year guidance was well received, underpinned by the strength in broadband and Global Services.

"As investors look towards strong, cash generative companies with a decent yield, BT has served up a reminder of why it should be considered," he added. Shares rose 3% in early trading.

PA