BT profits nothing to phone home about
Farewell Ben Verwaayen
BT failed to increase profits this year, although turnover was up very slightly in the fourth quarter ended 31 March.
For the full year BT turned over £20.7bn, a two per cent increase on 2007. But profit before taxation and specific items was £2.5bn - no improvement on last year. BT did raise its EBITDA some three per cent to £5.8bn. Earnings per share grew five per cent to 23.9 pence and BT will pay a dividend for the year of 15.8 pence per share, also up five per cent.
New wave revenue - from broadband and IT services - grew nine per cent to £8,043m and traditional fixed line revenues fell by one per cent.
Restructuring and redundancy payments cost BT £110m in the year.
The company also said it was changing the way it will introduce its next generation network 21CN. It was originally seen as a mass migration of customers which would later deliver new services, but BT now expects to provide new services from the outset. It said the programme had been expanded to focus more on software-driven services and extra demand for enterprise customers.
Later this year BT will introduce an "innovation platform" so that the telco and outside developers can develop new applications and services for the network.
BT Wholesale saw revenues for the year shrink 12 per cent to £1.18bn. It blamed this loss on a £97m decline in low margin transit and premium rate services revenues and a £54m dip in broadband revenues caused by price cuts. The telco expects more ISPs to connect directly so low margin transit revenues will continue to fall.
BT shares were up very slightly - half a per cent - this morning but are down 28 per cent on the year.
Chairman Sir Michael Rake credited outgoing CEO Ben Verwaayen with transforming BT's business. He will be replaced by current retail chief Ian Livingstone.
BT remains confident looking forward and expects to increase dividends in 2008/2009. ®