Cegetel sale helps BT stay in profit

22 May 2003

The sale of its stake in French telco Cegetel helped the BT Group [London: BT.L] record net profits of GBP1.65 billion for the first three months of 2003, the fourth straight quarter that the company has reported a profit since coming under the guidance of chief executive Ben Verwaayen in early 2002. Total sales rose by just under 1% to GBP4.78 billion, thanks to increased revenues from the Group’s broadband subsidiary BT Openworld which witnessed a surge in demand for DSL services from the residential sector. BT claimed that during March customers signed up at a rate of 25,000 a week – a new record for the company. The Group now has 936,000 broadband internet customers, a figure it is aiming to increase to five million by the end of 2005.

BT’s balance sheet received a hefty boost from the sale of its 26% stake in French telco Cegetel to Vivendi for GBP2.6 billion in February, generating a one-time gain of GBP1.53 billion. At the end of March BT’s net debt stood at GBP9.6 billion, down from GBP12.9 billion at the end of 2002 and a high of GBP28 billion in 2000. The reduction helped cut annual interest payments by GBP35 million to GBP266 million. Capital expenditure for the period fell by more than a quarter to GBP724 million. On a less positive note BT said the deficit in its pension fund widened by almost five times to GBP6.3 billion. The company has 20 years to clear the debt and has said it will put GBP232 million per annum into the fund to do so, up from the GBP200 million a year it has been contributing since 2000.

United Kingdom, BT Consumer, BT Group (incl. Openreach)