BT financial results disappoint the City

Verwaayen: pipeline is the strongest ever

BT’s revenue for the third quarter was flat at £5.1bn, a one per cent rise from the previous year, with pre-tax profit falling by 30 per cent from £639m to £447m.
The telecoms firm’s share price fell on publication of the figures last week.

But chief executive Ben Verwaayen was keen to emphasise the strong performance of the group’s Global Services and Retail divisions, counteracting a revenue drop of £51m in the Wholesale business that sells BT network capacity to other telecoms suppliers.

“We are delivering on what we promised on margin improvements in Global Services, hand in hand with robust growth,” Verwaayen told investors.

“The business pipeline is the strongest ever,” he said.

BT Global Services has increased its profit margin to 10.9 per cent, though it has not yet reached the firm’s 15 per cent target.

Third-quarter revenue for the division was up six per cent to £1.96bn, and is expected to rise in the final three-month period as long-term deals start to deliver.
BT Retail sales were up two per cent to £2.1bn, with strong growth in the small business market for packaged network and IT services.

BT has had some success in transforming itself, but broadband price wars are still having an effect, according to Forrester Research analyst Peter Nuttall.

“The biggest concern lies with BT Retail, because it is so reliant on broadband,” he said.

“Though there is still potential for growth, rivals are offering free products and services with broadband subscriptions.”