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UK's broadband demand proving profitable for BT [Newcastle Journal (England)]
[May 13, 2011]

UK's broadband demand proving profitable for BT [Newcastle Journal (England)]

(Newcastle Journal (England) Via Acquire Media NewsEdge) TELECOMS group BT has reported a 71% rise in profits after more than pounds 1bn of cost savings helped it overcome a 4% drop in revenues.

The bigger-than-expected improvement in full-year profits to pounds 1.7bn was helped by the company's continued success in broadband, with the proportion of customers signing up to its own service now at an eight-year high.

BT said 252,000 customers were added by companies using BT's network, such as Sky or TalkTalk, of which 64% signed up with BT.

The retail arm grew profits by 2% to pounds 1.34bn, while the company's formerly troubled Global Services division, which caters for businesses and governments across the world, narrowed losses to pounds 141m.

Cost savings were higher than the pounds 900m targeted but unlike the previous financial year, when the company saved pounds 1.75bn, job losses were not the main driving force behind the efficiency gains.

Stripping out one-off charges from last year, adjusted profits were 20% higher at pounds 2.1bn.

BT added that its pension scheme was in better health, with the valuation deficit down from pounds 9bn to an estimated pounds 3.2bn.

It said the Pension Regulator had also put on hold a review into BT's pension fund recovery plan until the next funding valuation at the end of 2011.

This allayed fears that BT could be forced to pay more into the scheme, holding back future dividend payments.

The company yesterday announced a 7% rise in its full-year dividend to 7.4p a share.

Chief executive Ian Livingston said: "These results show we are making progress, but we are well aware there remains a lot more to do." BT added 1.1 million homes to its network over the course of the year, which equates to a new connection every 30 seconds.

It said it has connected seven new homes for every one connected through Virgin Media's cable service.

It has added 144,000 customers to its super-fast broadband service after its launch about a year ago.

Mr Livingston claimed its roll-out is among the fastest in the world and by the end of this month it will be capable of providing the service for five million premises.

Some 30,000 new customers were added to its Vision broadband TV service, which offers Sky Sports 1 and 2, in its final quarter, bringing the total to nearly 600,000. BT's Global Services division saw its orders up 10% at pounds 7.3bn and it also turned cash-flow positive a year ahead of plan.

The company also revealed that the number of landlines in the UK returned to growth last year after being boosted by rising demand for broadband.

While demand for calls continues to wane, the landline is undergoing a reversal in fortunes as households and businesses that previously disconnected their landlines to rely on mobile technology are tempted back by broadband.

As a result, the number of landlines on BT's network increased by 11,000 to 24.8 million in the year to March 31, after a 300,000 decline the previous year.

BT, which recently hiked the price of daytime calls, said the growth of broadband meant the future of the landline was bright, even though call volumes are set to carry on being squeezed by mobile phones and other methods of communication.

(c) 2011 ProQuest Information and Learning Company; All Rights Reserved.

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