BT sees EBITDA improvement as cost cutting measures take hold

3 Feb 2011

UK fixed line incumbent BT Group has reported a 7% increase in core earnings in the three months to end-December 2010, with the operator attributing the improved performance to cost-cutting measures. The telco reported that total group operating costs had fallen by GBP238 million (USD384 million), or 5%, in the quarter, to GBP4.41 billion, while depreciation and amortisation was GBP751 million, broadly flat year-on-year. Earnings before interest, tax, depreciation and amortisation (EBITDA) was GBP1.48 billion for the three-month period, although total turnover fell 3% year-on-year to GBP5.04 billion in line with expectations. BT Global Services, the company’s enterprise unit, once again showed improvement following restructuring, increasing its EBITDA margin to 7.1% from 5.8% a year earlier. The unit is now expected to be cash flow positive in the current financial year, a year earlier than targeted.

In operational terms BT claimed that it had it seen an increase in market share via its domestic retail unit, with it saying that it had won 53% of new customers in the three months to end-December 2010. In the quarter it reported net additions of 188,000 for its high speed internet services, which it said represented its highest share of DSL broadband net additions in the UK in more than eight years. It attributed the improved uptake to ‘the success of our broadband strategy, including BT Infinity and Wi-Fi, as well as our competitive offers and growth in our Plusnet brand’. BT also highlighted the increasing number of customers taking up its IPTV service, BT Vision, with the telco reporting that it saw 40,000 in the last three months of 2010, its highest rate for seven quarters.

Commenting on the results, BT CEO Ian Livingston said: ‘These results show that we are making progress on a number of fronts. There is always more to do, but our performance underpins our outlook for this year and the period to 2012/13.’

United Kingdom, BT Group (incl. Openreach)