Broadband gets BT (over)bullish

By Matt Whipp

Posted on 13 Feb 2003 at 12:12

Q3 2002 results show BT's upward trajectory slowing.

BT Group has released figures for the quarter ending 31 December with earnings per share jumping 71 per cent, before one-time costs are added. In a similar vein, the group reported profit before tax at £521m, up 37 per cent.

Ben Verwaayen, Chief Executive, said: 'These are excellent results, they demonstrate a substantial increase in profitability.'

However, operating profit for the group was in fact down two per cent at £771m compared with Q3 2001 and early trading has seen shares down 3 per cent to 178p.

While the group cut some £195m off its debt, with the sale of its interests in Cegetel in January to cut another £2.6bn, the net debt at the end of December still weighed in at a mighty £12.9bn.

More gloss from Verwaayen came in his comments on the success of the group's broadband strategies: 'We generated our highest ever broadband sales, with in excess of 25,000 per week in January, launched a major market awareness campaign, reduced wholesale and retail connection charges and lowered the exchange upgrade trigger levels, demonstrating our strong commitment to broadband Britain,' he said.

But the figures show that BT's commercial broadband offerings, Ignite and Openworld, are running at operating losses of £90m and £8m respectively. BT Wholesale, which sells to the ISPs is in operating profit to the tune of £526m for the quarter - so the broadband success reflects ISPs' ability to sell the BT Wholesale product, with apparently more success than BT itself.

So, of course, the cable guys couldn't resist having a pop, with Telewest claiming that in areas where users have the choice of ADSL or Telewest's Blueyonder, 80 per cent go to Blueyonder. Gavin Patterson, managing director of Telewest Broadband, said: 'BT is muddling its numbers with a confusing combination of business and residential customers. It's using over 100 ADSL resellers to stake a claim in broadband Britain, but still trailing in our wake.'

Pension woes also look likely to reveal themselves when the funds are evaluated in May. A preliminary evaluation rates the fund with a deficit of £1.5bn as at the end of this year. Much of this is put down to poor market performance afflicting its investments.