BT Sales Wilt Amid Economic Downturn
The economic turmoil engulfing European economies and tough times in the financial sector have hit BT’s revenues
The troubled economy has taken its toll on the first quarter results from BT, as the carrier reported a six percent decline in group sales.
For the quarter ending 30 June, the former UK incumbent posted sales of £4.48 billion, down from £4.76 billion a year ago. Yet BT recorded a net profit of £451m, up from £385m.
While the financial figures represent something of a mixed bag for the carrier, shareholders will not be pleased at the poor performance of three of BT’s major divisions, which saw declines during the period.
Revenues at BT Openreach were relatively stable after it posted revenues flat at £1.26bn for the period. But three other important BT units fared less well.
BT Retail sales fell three percent to £1.77bn, whilst BT Wholesale saw an eight percent year-on-year decline with revenue of £923m. But the worst performance came from the company’s IT services division (BT Global Services), which recorded a nine percent year-on-year revenue fall.
BT’s chief executive laid the blame for the Global Services decline on tough conditions in Europe and the downturn in the financial services sector.
“We have delivered another quarter of profit growth and the 11th consecutive quarter of double-digit earnings per share growth,” said chief executive Ian Livingston. “There were good performances in BT Retail, BT Wholesale and Openreach while BT Global Services was impacted by the tough conditions in Europe and the financial services sector.
“Our financial performance allows us to keep investing for the future. Our engineers are rolling out fibre at pace bringing fibre broadband to over two million more homes and businesses in the quarter and it’s now available to over 11 million premises. Our investment plans are creating around 2000 jobs in 2012 by recruiting engineers to support our fibre plans and opening four new UK call centres. We continue to make good progress with our investments in the faster growing economies.”
Indeed, broadband continues to be a bright spot for BT, as it added 50,000 retail broadband customers in the quarter, a figure which represented 50 percent of the overall 170,000 broadband market net additions during that period.
BT also revealed that 150,000 customers have signed up to its fibre broadband service and its total customer base now stands at a relatively healthy 700,000.
The telecoms giant continues to roll out fibre to two thirds of the UK and also stands to win the lion’s share of the government’s Broadband Development UK (BDUK) funding, much to the chagrin of rival carriers and ISPs.
However an official probe into the BDUK process by the European Commission’s competition arm could potentially derail this.
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