Broadband performance boosts BT
Having managed to negotiate a variety of economic headwinds, BT Group (BT.A) released positive results for the three months to the end of December.
Pre-tax profit up 18% to £628 million, buoyed by the strong performance of its broadband-providing Openreach division.
Shares in the group on Friday lifted to price levels last seen in mid-July 2008. Investor interest was pushed forward by a Morgan Stanley sector note that stated BT Group was 26% cheaper than its US peer ATandT (T), based on free cash flow to equity.
"Our investment to support our customers and improve our services has resulted in new contract wins around the world, with orders so far this year up over 50% in Asia Pacific and Latin America," said Ian Livingston, group chief executive.
"In the UK, our fibre roll-out has accelerated bringing super-fast broadband within reach of over seven million homes and businesses, and we remain the number-one broadband retailer with over six million customers. Our fixed-line base has now grown for the last five quarters and our active consumer line loss is at its lowest for five years."
Revenues were down 5% to £4.77 billion across the company, with the wholesale division underperforming as broadband provision continues to be migrated from legacy infrastructure.
There was also concern about the significant increase to the group's pension deficit, which rose to £4.1 billion. BT said this reflected low returns on corporate bonds.
However digital developments did provide the most exciting story as the Openreach division announced that both operating profits and revenues increased - up 8% and 5% respectively.
The positive internet results should be maintained as the group's 'ultra-fast' broadband with fibre-optic cables to homes, as opposed to fibre to cabinet and copper to the door, will be available to most British homes within the next year, offering speeds of up to 300 megabits per second.
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