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BT's new wave buoys up profits

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BT brought in revenues of £4.8bn in the first quarter ended 30 June 2006 - up three per cent on the same period last year and in line with analysts' expectations.

Profit before tax and after specific items was £615m, up from £499m in the first quarter of 2005.

Profit before specific items and leaver costs was £1.386bn, up from £1.363bn for the first quarter of 2005. BT increased "new wave revenue" by 18 per cent to £1.641bn. "New wave revenue" is from networked IT services, mobility and broadband services. Networked services grew by nine per cent to £981m, broadband revenues grew to £454m - an increase of 45 per cent. Mobility revenues grew eight per cent to £71m.

The telco had 8.7m wholesale broadband connections on 30 June 2006 and made 535,000 connections in the quarter. It had 580,000 local loop unbundled lines. More than 40 per cent of UK homes now have broadband services.

Revenue from traditional activities declined by four per cent due to regulator intervention, competition, and price reductions. The yearly average revenue per consumer household increased by £2 on last quarter to £253.

Staff costs increased by £100m in the period due to extra staff needed for networked services and for building BT's new network - 21CN.

BT has been talking to the rest of the industry about 21CN and presented detailed proposals in May. The network will make BT the first incumbent to switch off PSTN and switch all calls to an IP-based network. Twenty-three m illion calls have been carried this way since May. In November this year, BT will migrate the first end user lines to 21CN in the Cardiff area. Migration will continue until June 2007 followed by industry review ahead of national migration beginning January 2008.

The acquistion of dabs.com closed 28 April and will improve BT's online retail sales and increase services aimed at small and medium businesses. BT's traditional retail revenues fell by eight per cent but new wave revenues grew by 31 per cent, making up 19 per cent of total revenue for the period. ®

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