BT yet to feel impact of the 'Carphone effect'

Latest figures show traditional business hurting

By Tim Richardson • Get more from this author

Posted in Financial News, 18th May 2006 10:03 GMT

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BT has seen "no impact" on its business following the much-hyped launch of Carphone Warehouse's "free broadband forever" product.

A month ago Carphone confirmed the details of its new bundled phone, broadband and line rental service that at £20.99 a month all-in, was half the price of its nearest rival.

But the UK's dominant fixed line telco insists that it "hasn't seen any noticeable effect on [its] figures" since Carphone's aggressive price announcement. Asked whether BT was likely to follow suit, especially with rumours circulting that Wanadoo is to unveil an equally competitive deal when it rebrands to Orange over the next two weeks, a spokesman told us that BT "offers more than just a cheap price".

The comments come as BT revealed that it had just over eight million wholesale broadband lines including 365,000 LLU lines - up 2.9m over the last year.

The number of retail broadband connections were also up to almost 2.6m with the telco currently accounting for three in ten of all new wholesale DSL and LLU connections.

But while broadband and other "new wave" revenues continue to grow BT acknowledged that its core revenues are still taking a hammering. New wave revenues, including broadband and ICT, rolled in at £6.3bn for the year ending March - 38 per cent higher than last year, which helped to offset the 5 per cent decline in traditional phone revenues.

Overall, total revenues for the group were up 6 per cent on the year to £19.5bn while profit before tax and specific items was £2.2bn - up 5 per cent on last year thanks to lower finance costs and an increased share of profits from JVs.

BT chief exec Ben Verwaayen said today's figures showed that the telco had taken massive strides since he joined the company and that the firm was "firing on all cylinders".

"This quarter's results are a terrific set of numbers," said Verwaayen. "These results provide further evidence that our strategy of embracing change is working. BT has changed very significantly from four years ago, and the transformation is accelerating." ®

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