Christmas broadband surge gives a boost to BT figures

A surge in new broadband internet customers during the third quarter helped British Telecom take pole position in the UK market, pouring cold water on Virgin Media's claim yesterday to be the "Number 1 in broadband".

BT added 239,000 new broadband customers over the Christmas period, equating to 34 per cent of the total number of new broadband additions, helping to lift pre-tax profits for the three month period by 13 per cent to £643m. That took its customer base in broadband to 3.2 million before factoring in the further 200,000 broadband customers it acquired via the acquisition of Plusnet.

At its brand launch yesterday, Virgin Media, formerly NTL Telewest, bragged about being the number one broadband player, claiming it had 3 million subscribers to high-speed internet.

BT only took a 25 per cent share of new broadband additions in the second quarter, leading to speculation that the company was feeling the heat of competition, with companies such as Sky, Carphone Warehouse and Tiscali eating into its market share with increasingly aggressive offers.

Ian Livingston, the head of BT Retail, said: "We had a very good quarter, much better than our competitors. Since I started at BT Retail, the analysts and cognoscenti have been predicting that we would fall off a cliff. Yet BT Retail profits have grown over 20 per cent over the past two quarters."

BT Retail grew its revenue for the first time in four years in the third quarter as it benefited from broadband growth, expansion in the business market and, surprisingly, a turnaround in its traditional voice business. A spate of price cuts helped drive market share gains in the fixed-line telephony market over the Christmas period. It is the first growth since 2002 when Carphone Warehouse launched its TalkTalk service.

Mr Livingston also said that Virgin Media was "quite wrong" to claim it was the only operator in the UK to offer a quad-play service that bundles television, broadband, fixed-line and mobile phone services into one package as customers can buy all those services from BT.

Shares in BT rose 3.25p to 319.75p, the highest level in almost six years after the third-quarter results beat expectations and BT revealed an unanticipated £1bn tax rebate on corporate tax payments it has made over the past decade.