Telecommunications giant BT today reported better-than-expected profits, boosted by a surge in revenues from new services, such as internet broadband.
Profit before tax for the year to March 31 2004 came to £2bn, up from £1.8bn for the previous 12 months. The former monopoly, losing ground in its traditional fixed-line business, said revenue rose to £4.7bn in its fourth quarter, up 1% from a year earlier and up 4.5% on the preceding quarter.
BT's share of the consumer market declined by 2.9% during the year to 69% as rivals such as Carphone Warehouse launched fixed-line services. Although its share of the business market fell by 3.6% over the past 12 months, BT said revenues were improving as corporate customers switched to the latest technology.
A contract with the NHS to provide information and communications technology (ICT) - an area in which BT is making a big push - added £77m to turnover in the first three months of 2004.
"These are good numbers. This is the first time I can say that in about 15 months for BT," Francois Pierre-Arth, an analyst with Exane-BNP Paribas, told Reuters.
BT's performance was boosted by a 38% rise in so-called "new wave" services, including internet broadband and business computing, areas that BT is counting on to offset the decline in its core fixed-line business.
Ben Verwaayen, the chief executive, said the results were achieved in a challenging environment which was expected to continue in the current financial year.
"The results from our new-wave businesses show our strategy is working," he said.
Mr Verwaayen said BT aimed to have more than 99% of the UK connected for broadband within a year, putting the UK towards the top of the broadband league. There were now close to 2.5 million customers with access to broadband provided by BT and quarterly turnover from high-speed internet access had more than doubled to £165m.
The roll-out of broadband is one of the arguments put forward against the potential breakup of BT, an issue at the heart of a strategic review of the telecoms sector by regulator Ofcom. The separation of BT's network infrastructure from its retail arm is among five "fundamental questions" to be considered by Ofcom - the new watchdog for the sector - by the autumn.
The results come a week after BT announced it was cutting its prices to wholesalers in an effort to head off possible regulatory intervention. It means rival telecoms groups can now access local telephone exchanges more cheaply and could spark a price war in sales of broadband services.
