BT calls in with 20 per cent operating profits |
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Fri, 29 Jul 2005 10:05
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LONDON: Britain's largest fixed-line telecoms operator, BT Group has reported a 20 per cent increase in operating profits for the second quarter of the year of the year ending June 30. The pre-tax profit numbers added up to £511 million.
However, concerns regarding the sustainability of this phenomenal growth kept BT shares down by 1.3 per cent to 231.75p. But this market speculation was justified in some measure as BT admitted that earnings before specific items had dropped to £1.36 billion as compared to £1.39 billion posted in the first quarter of the year. This was a fall of nearly 2 percent. BT shares have been bullish since May ever since it reached a settlement with market regulator Ofcom. But analysts are wondering if the profit margins can be carried on for the rest of the year.
At the moment however, BT chief executive Ben Verwaayen is a satisfied man, "This has been a great first quarter and builds on the momentum we have seen gathering for more than a year," he said. BT also revealed that margins for its "new ideas”, mainly in the broadband services were quiet healthy and had surged by 48 percent to £1.39 billion.
However, the elation at carving out a niche in this sector was short-lived as the group suffered in the traditional sector and took a 9 percent hit. This meant that BT's overall retail revenues dipped by 4 percent to £2.1 billion. Net revenues rose by 5 percent to £4.8 billion. Revenues were greatly helped by the acquisitions of Infonet and Radianz and the takeover of the Italian firm Albacom.
Mr. Verwaayen acknowledged the role played by these acquisitions, "We won global networked IT services orders of £2.4 billion in the quarter which takes orders for the last 12 months to a record level of more than £8 billion - a terrific achievement. In the UK, in a highly competitive environment, we have launched a number of innovative services such as BT Fusion - a world first that delivers all the benefits of a fixed line from a mobile phone," he said.
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