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BT has pledged it will invest a further £1bn in its expanding fibre optic network, and is now aiming to cover about two-thirds of the country by 2015.

The plan brings the total value of the programme to £2.5bn. BT had previously committed £1.5bn to lay fibre-to-the-cabinet or fibre-to-the-premises to about 40 per cent of homes and businesses by mid-2012.

BT Openreach, which is carrying out the work, has said about three quarters of exchanges will be upgraded to fibre-to-the-cabinet - theoretically capable of up to 40Mbit/s downstream - with the remainder getting more expensive to install fibre-to-the-premises technology. The latter will begin as an "up to" 100Mbit/s downstream service, but could run many times faster.

The additional funds will come out of its already-planned capital expenditure pot, BT said.

The firm has previously claimed the economics of faster broadband do not stack up for the remaining third of the country, which will comprise more sparsely populated regions. A 50p per month tax on telephone landlines proposed by Labour for a subsidy available to BT and other firms planning rural deployments was scrapped in Parliamentary bartering before the election.

The expansion announcement came as BT revealed a return to profit in its annual results. Last year it lost £244m, mainly because of failures in its Global Services IT outsourcing division, but the group today recorded a pre-tax profit of £1bn on sales down two per cent to £20.9bn.

Chief executive Ian Livingstone hailed a recent cost-cutting programme.

"We have improved customer service, are transforming the cost base and have more than doubled free cashflow, but there is still a lot more to do," he said.

BT plans a push for its TV offering BT Vision later this year, after Ofcom recently forced Sky to offer its premium football packages to competitors on a wholesale basis. The rollout of fibre will also allow BT Retail to offer high definition television.

"We are investing in the future of our business, enhancing our TV offering and building on opportunities in our Global Services business," said Livingstone.

Global Services is undergoing lay-offs and restructuring costing £420m and led by Jeff Kelly, a former EDS executive. ®

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