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More people opt for BT broadband as revenue dips

The British telecoms incumbent has had a tough first quarter, with an overall revenue decline driven by the European recession offset by a decent performance in its broadband division
Written by Ben Woods, Contributor on

BT's broadband division saw a healthy rise in new customers in the first quarter, gains that helped offset lacklustre performance in other areas of the business.

Overall, BT Group's revenue fell six percent to £4.5bn in the past three months, as a result of the European economic slowdown and tighter budgets among financial services customers, the company said on Wednesday.

BT has reported an eight-percent increase in pre-tax profits. Image credit: BT

Despite the challenges, the telecoms giant reported an eight-percent increase in adjusted pre-tax profits to £578m, thanks in part to a strong performance from its Openreach broadband division.

"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," chief executive Ian Livingstone said in a statement.

"We have delivered another quarter of profit growth and the 11th consecutive quarter of double-digit earnings-per-share growth," he said.

Openreach signed up 85,000 new customers during the period, with a further 85,000 customers being added to its network via wholesale partners. These 170,000 fibre customers helped deliver profits of £309m at the broadband division, though this is only a one-percent increase year-on-year.

Fibre footprint

BT has been extending its fibre footprint and pushing on with efforts to double download speeds on its Infinity fibre-to-the-cabinet broadband service.

During the quarter, which ended 30 June, the company continued to roll out its fibre services. These are now available to more than 11 million UK homes — an increase of around two million premises since the last quarter.

The addition of 170,000 fibre customers takes the BT Infinity total to around 750,000. Approximately 700,000 of them get their services directly from BT, rather than from a reseller.

BT is heavily involved with the UK's rural broadband project, Broadband Delivery UK (BDUK), and it became an accredited supplier during the period. It successfully won bids for the North Yorkshire and Wales regions under the funding scheme. However, EU regulators are concerned that BT and Fujitsu are dominating the tender bidding, which could bring BDUK to a halt.

Media deals

The company noted a couple of media moves that could help bolster its broadband bundles. It revealed plans to launch a football-focused TV channel next year, and noted it has snapped up the right to show Premiership matches. Financially, the deal resulted in a £27m reduction in cash flow due to the deposit made for broadcast rights.

"We secured the broadcast rights to 38 live games and 18 first picks, around half of those available, for the 2013/14 to 2015/16 Premier League football seasons," BT said.

In addition, it plans to begin offering a bundled YouView service in the autumn, to attract people "looking for the next evolution of the Freeview service", BT said.

In April, BT began rebranding its BT Fon and BT Openzone hotspots as BT Wi-Fi. It now has more than 4.2 million hotspots, which handled more than 1.7 billion Wi-Fi minutes during the quarter, according to company figures.

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