TOP NEWS: BT Profit Rises On Lower Costs As Revenue Struggles

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LONDON (Alliance News) - BT Group PLC kept its full year forecasts unchanged Friday after its third quarter profit rose on lower costs despite revenue falling, as its global services unit suffered again amid a mixed quarter for customer numbers across its business.

For the three months ended December 31, pretax profit rose 25% to GBP660 million from GBP526 million the year prior. Revenue fell 2.6% to GBP5.97 billion from GBP6.13 billion the year before.

Third quarter profit performance was boosted by declining operating costs. These fell to GBP5.12 billion from GBP5.40 billion the year before. Revenue performance, however, continued to be hurt by a further 9.4% decline in its global services business to GBP1.27 billion in the third quarter from GBP1.40 billion the year prior.

For the nine months to date, pretax profit fell 8.9% to GBP1.74 billion from GBP1.91 billion the year prior. Revenue fell 1.0% to GBP17.76 billion from GBP17.94 billion the year before.

The former state monopoly - which owns consumer mobile network provider EE - saw mobile subscribers fall to 29.8 million from 30.2 million the year prior.

Total broadband subscribers - including its PlusNet brand as well as eponymous BT customers - grew to 20.6 million from 20.3 million the year before. This was helped by a further 600,000 fibre Openreach broadband customers adds in the quarter, faster than the 498,000 adds seen in the same period the year before.

Retail fibre net adds in the quarter, however, slowed to 208,000 from 260,000 the year prior.

BT consumers however both took on more of the FTSE 100-listed firms products, helping it to generate more revenue per customer. Average revenue generating units per customers advanced to 2.02 from 1.96 the year prior with average revenue per BT consumer expanded to GBP41.30 from GBP39.40.

"Our third quarter financial results are broadly in line with our expectations and we remain confident in our outlook for the full year," BT Chief Executive Officer Gavin Patterson said. "We continue to improve our customer experience metrics across the group, with our sixth successive quarter of improved customer perception."

BT kept its forecasts for the year ending March unchanged. It stills expecting underlying revenue to remain flat and hold firm on its progressive dividend.

Adjusted earnings before interest, tax, depreciation and amortisation is anticipated to fall between the range of GBP7.50 billion and GBP7.6 billion. For the year ended March 2017, BT generated adjusted Ebitda of GBP7.65 billion.

On Thursday, BT raised its fibre to the premises build target to 3 million premises by 2020 from 2 million the year prior. Last Friday, however, it was fined GBP70,000 by Ofcom after it failed to provide the regular information requested as part of its review of wholesale provision of fibre internet.

"We continue to work closely with the UK Government, Ofcom and our customers to expand the deployment of fibre and Openreach recently announced plans to accelerate our FTTP deployment to three million premises by the end of 2020", Patterson added.

"We agreed a reciprocal wholesale deal with Sky that will deliver market leading sports and entertainment channels to our BT TV platform by early 2019, reinforcing our strategic goal of being the best provider in the UK of converged network services."

During the third quarter, BT TV saw a net loss of 5,000 customers. This is in contrast to the 52,000 additions in the previous year.

"The triennial valuation of the BT Pension Scheme is proceeding and constructive discussions continue with the BTPS Trustee," Patterson added. "We still expect to complete the valuation in the first half of the 2018 calendar year. Our aim remains to deliver fair, flexible and affordable pensions to all of our employees."

In mid-January, the UK High Court blocked BT from changing the index used to calculate its section C pension scheme. BT had proposed to change from the retail prices index to an unspecified other index. The telecoms giant said it was "disappointed" with the decision at the time.

"We are delivering against our strategy, capitalising on opportunities and responding to market challenges with a robust set of actions," Patterson concluded. "Looking ahead, we're confident in the steps we are taking to improve the performance of BT for all our stakeholders."

By Ahren Lester; [email protected]

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