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BT passes fibre milestone as profits rise

The telecoms company, which has rolled out its super-fast broadband network to 10 million premises, saw annual profits go up 42 percent in the last financial year
Written by David Meyer, Contributor

BT's wholesale fibre service is now available to 10 million households and businesses in the UK, the company said on Thursday, as it announced a 42-percent rise in yearly profits.


BT has brought fibre broadband to 10 million premises while seeing its profits rise 42-percent year-on-year. Image credit: BT

The telecoms firm had originally set a target of the end this year for the milestone, but it has achieved that target early. Ultimately, BT's £2.5bn plan is to take fibre past 16 million premises, or two-thirds of the UK, by 2014.

"Our engineers have worked tirelessly this past year and BT has made a real commitment to the UK's infrastructure," BT chief executive Ian Livingston said in a statement. "Rolling out fibre is no easy task and so to have passed 10 million premises in such a short time is fantastic. Our rollout is one of the fastest in the world and our engineers deserve lots of credit."

BT's results provided some figures on the fibre network's success so far. More than 550,000 people have signed up for the company's BT Infinity super-fast broadband service, which offers speeds of up to 80Mbps, and more than 60 smaller ISPs are reselling the service that underpins that retail product.

BT is expected to receive the majority of the government's £530m Broadband Delivery UK (BDUK) fund, which is aimed at extending the reach of super-fast broadband to rural areas and other parts of the UK that are not as commercially attractive as the more populous two-thirds.

According to BT's statement, the company has so far only won the Lancashire bid and been chosen as the preferred BDUK supplier in Rutland. Until more of the bidding processes close, this funding is unlikely to show up in BT's results.

Profits up, revenues down

BT's results showed a 42-percent jump in pre-tax profits, for the year ending 31 March, to £2.4bn. This was achieved largely through cost-cutting and a drop in restructuring charges, but overall revenues were down four percent at £19.3bn.

Our rollout is one of the fastest in the world and our engineers deserve lots of credit.
– Ian Livingston, BT

The company said the revenue drop was within its target range, and blamed it on "the challenging environment in certain markets" and the long-term trend of customers using their landlines less.

BT also suggested that Ofcom-mandated pricing controls on its wholesale and unbundled line rental products would take between £100m-£200m off its revenues for the next financial year, and the same the year after that.

Nonetheless, it predicted overall revenue growth in both 2013 and 2014, and said dividends should grow by between 10-15 percent for the next three years.

"While we will be impacted by economic and regulatory headwinds, we expect to continue to grow profits over the next two years, with normalised free cash flow growing to above £2.4bn in 2014," Livingston said. "We will continue to pursue our prudent financial strategy, investing in the long-term future of the business, supporting the pension scheme, paying down debt and enhancing shareholder returns."

Enterprise revenues were up two percent in the quarter and one percent in the year, without factoring in the impact of foreign exchange movements. BT said this was largely down to BT Conferencing, which saw "an almost 20-percent rise in conferencing minutes in the quarter".

BT's consumer revenues were down two percent in the most recent quarter, but that drop was lower than those experienced over the last two years.

Ovum analyst Mark Giles told ZDNet UK that he was impressed by BT Retail's successful drive to add more customers.

"BT is doing quite well in terms of innovation," Giles said. "Today it's all about the bundle of services you can provide the market. The addition of Sky Sports really helped it, and also the availability of fibre now is a really strong differentiator at a time when users' bandwidth demands are going through the roof."

Giles suggested the overall results were in line with a positive trend in BT's business over the past two years. "They're continuing to make good progress in pretty much all their lines of business," he added.

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