Job cuts offset revenue drop at BT
BT reported a revenue drop of four percent in its third quarter, which it blamed on a tough market, but the telco saw profits rise after cutting jobs.
Its revenue for the last three months of 2009 was £5.2bn, compared with £5.44bn in the same period a year earlier, the telecommunications and IT services company said in its results statement on Thursday.
The fall reflected "the challenging market conditions and the trends seen in previous quarters", BT said in the statement. It would have been five percent if not for "favourable foreign-exchange movements", it added.
Third-quarter earnings (Ebitda) were £1.44bn, showing a rise of 11 percent year-on-year. Profit was £466m, a jump of 39 percent compared with £335m recorded in the same period last year.
BT chief executive Ian Livingston said the results show the company is making progress. "There is still a lot more to be done, but our commitment to improved customer service and cost transformation is starting to deliver results and freeing up resources to invest in our future," Livingston said in the statement.
"In particular, we are one of Europe's largest investors in super-fast fibre-based broadband and this will bring huge benefits to our customers and the UK."
As for outgoings, the company reported a 27 percent year-on-year reduction in capital expenditure, resulting partly from a cost-cutting drive and partly from the timing of certain projects. BT said it had expected capital expenditure to be higher, "largely due to a higher level of activity on investment programmes".
In 2009, BT embarked on a series of job cuts at its BT Global Services unit, which has been recording large losses. The company said in May that it was planning to eliminate 15,000 jobs over 12 months at the unit, which provides communications and IT services to enterprises and government organisations.
For the third-quarter, BT Global Services saw a fall in revenue of three percent, to £2.12bn. BT Retail's revenue declined five percent to £2.06bn, and BT Wholesale's revenue dropped by eight percent to £1.09bn. Openreach also recorded a revenue drop, falling three percent to £1.3bn.
BT's latest results show the negative impact of the company's massive internal reorganisation, coinciding with the recession, Gartner analyst Scott Morrison told ZDNet UK on Thursday.
"Given that BT was destined to go through this whole reorganisation anyway, one could certainly argue that the recession couldn't have come at a worse time," Morrison said.
"BT has done a good job of controlling costs, but has taken its eye off the ball regarding opportunities to grow revenue elsewhere. When you get rid of so many people at the same time, there is bound to be employee dissatisfaction, with deals not being made and clients not been retained."
Morrison pointed out that "many businesses in the UK have gone to the wall" in the last year, leaving BT servicing fewer lines. However, he also noted that the company was "doing a good job" in creating new business opportunities in the managed-services market.