* Beats forecasts for Q3 profit before tax
* Cost cuts offset weaker revenue
* Shares up 4.6 percent
By Kate Holton
LONDON, Feb 1 Strong demand for broadband and
tight cost control helped Britain's BT offset the
combined pressures of regulation and recession to post a
better-than-expected 7 percent rise in third-quarter pre-tax
In a continuation of the strategy that has sent shares in
the group to a near five-year high, BT said it had recorded
profits in the three months to Dec. 31 comfortably ahead of
forecasts, off revenues that were down by 6 percent.
The news sent shares in the group up 4.6 percent, topping
the FTSE 100 leader board and giving the group a market value of
20.5 billion pounds.
The group was boosted by demand for broadband, both at the
retail level directly to customers and in wholesaling the
service to rivals, as an increase in the number of engineers it
employs helped the group to rebound from the previous quarter
which was hit by rain.
The group said it had now become the biggest fibre broadband
network in Britain, overtaking Virgin Media, after it
passed 13 million homes with the technology.
More than a million of its customers are now using fibre and
the group hopes that the imminent launch of its BT Vision sports
channels with Premier League soccer and rugby will encourage
others to upgrade to the faster and more expensive product.
"More than 13 million premises can access our fibre
broadband and we are passing around 100,000 additional premises
every week," Chief Executive Ian Livingston said.
"Take-up is growing strongly ... (and) this gives us an
excellent platform for our push into TV and sport later this
The tight focus on costs and underlying improvement in
trading has helped BT regain investor confidence in recent
Total operating costs were down by more than 1 billion
pounds in the last nine months alone, as the group improved
terms with suppliers, used fewer contractors and third-party
sources and benefited from improvements to the network.
That helped lift third quarter adjusted profits by 7 percent
to 675 million pounds ($1.07 billion), some 7 percent ahead of
consensus at 632 million pounds.
Group revenues, hit by regulation and economic pressures in
Britain and Europe where it serves multinational corporations,
were down 6 percent.
"As one of the few European incumbents increasing EBITDA, BT
remains an attractive name in the sector," Berenberg analyst
Stuart Gordon said. "The momentum looks set to continue with the
cost-cutting efforts still bearing fruit.
"We expect modest upgrades to current consensus expectations
for the current financial year driven by the acceleration in
fibre and signs that Global Services is beginning to improve."
BT Global Services, the group's large division which deals
with multinational corporations, also looked to be performing
strongly with 1.9 billion pounds worth of new orders. Chief
Executive Livingston said the unit was now more efficient but
still had further room to improve.
"We have made progress in a number of areas and delivered
solid financial results," he said. "These are in line with our
expectations for the year, which remain unchanged."