BT boosts profits

BT has confounded its critics by boosting profits, cutting debt and maintaining its turnover despite falling revenues from its fixed-line semi-monopoly.

Pre-tax profits for the year are up 10 per cent to £2bn and revenues are almost steady at £18.5bn.

The surprise is in how quickly BT has expanded what it calls its 'new wave': mobile, broadband and ICT. This cumulatively grew at 30 per cent for the year to £3.39bn, with the fourth quarter seeing contract wins in ICT alone worth £2.3bn.

Not all these wins are booked but BT was able to report new wave turnover of £1.08bn for the fourth quarter, up by 38 per cent.

Chairman Sir Christopher Bland said in his statement: "The group has continued to make good progress this year and delivered strong financial results while continuing to transform the business."

Bland resisted any desire to crow over BT's detractors in his statement. Given these strong results, it must have been difficult. It remains to be seen if he keeps this up when he makes the formal announcement later today in London.

Most analysts had expressed polite scepticism on BT's ability to make changes fast enough to counter the company's loss of revenue from fixed-line. Most agree, however, that the company is making the right moves.

Other highlights include cutting debt by 12 per cent to £8.43bn, achieving almost 2.5 million broadband users, boosting the dividend by 31 per cent to 8.5p per share and increasing cash flow.

The company is shedding staff through voluntary redundancies and many of the figures in its statement exclude what it calls "leaving costs". The scale of these will become evident later today.