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BT is to introduce a pre-pay system for its fixed-line phone customers in a bid to reduce consumer debt at the telco.

Working in a similar way to pre-payment methods operated by mobile phone companies, the new billing system - dubbed "BT Pay & Call" - will allow people to pay into a special account from which call charges and rental fees will be drawn.

Individual accounts can be topped up by direct debit, credit cards or cash, using a BT payment card.

And if account isn't topped up, then customers are barred from making outgoing calls.

In a statement BT confirmed that it is planning to introduce a pay as you go service next year to help "a small number of its customers, who need help budgeting for the cost of their phone bills".

However, according to sources BT hopes to sign up a whopping 600,000 customers in the first year alone who have bad track records of paying their bills.

Not only will the service help cut debt by getting people to pay up front, it should also help reduce the cost of managing BT's customer debt by improving cash flow and cutting billing costs.

Although the service allows customers to access most of BT's services, there are exceptions including broadband, ISDN and some of BT's "Together" packages.

Meanwhile, the FT reports that BT will backtrack on ambitious revenue growth targets set earlier this year blaming the economy and a continuing slump in the telecoms market for the downgrading of its predictions.

BT had said it hoped to generate growth of between 6-8 per cent over the next three years, but analysts now doubt it can hit this target. ®

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