BT keeps up £1bn new wave momentum as voice dies

BT's investment in its new wave businesses - mobile, broadband and ICT services - seems to be paying off, as the modernisation continues to buoy the balance sheet and traditional voice revenues slip away.

BT's turnover for the third quarter was £4.6bn with an EBIDTA (earnings before interest, tax, depreciation and amortisation) of £1.5bn.

The new wave sector grew by 35 per cent year-on-year in the third quarter of last year, making the fifth quarter of growth over 30 per cent. ICT, mobile and broadband brought in £1.1bn.

The new wave businesses brought in 25 per cent of BT's revenue - up from 18 per cent the corresponding quarter last year.

While both mobility and broadband experienced stellar year-on-year growth - 98 per cent and 112 per cent respectively - BT's services made the biggest contribution to the balance sheet with £738m, while growing by only 21 per cent.

Despite the significant growth in revenue, the telco's ICT sector also cost the business an extra £22m as it took on more staff in order to fulfil its contracts.

Other new wave business units also cost the operator in terms of advertising and promotion to hook new subscribers.

BT's broadband business, however, notched up a healthy 800,000 connections and BT CEO Ben Verwaayen said he expects the telco to make five million connections a year earlier than expected and the company announced it was boosting its customers' broadband speeds for free today.

Chief analyst at Ovum, Julian Hewett, said the financials didn't necessarily mean the good times were back for the former incumbent.

Despite the big contract wins for the services divisions, the new wave isn't necessarily the saviour, according to Hewett. "Mobile, frankly, is pathetic. The growth rate is high but that's from a tiny base. It should have more revenue than £55m a quarter," he said.

"It's steady as she goes progress," he said of the telco's progress. "Given the decrease in fixed-line revenues, to make it up with the [new wave businesses] is impressive. It's pedalling hard enough to stand still."

BT's historical consumer business saw year-on-year turnover drop by 11 per cent which, according to the telco, was a result of consumers moving from dial-up to broadband and from carrier pre-selection.

Voice revenues are dropping across the industry, according to a report from analyst house IDC. Revenues for fixed-voice services in Europe are set to drop three per cent annually, from $108bn in 2003 to $95bn in 2008, the report says.

As well as the drop in voice revenues, BT's ARPU decreased to £259 - down £3 quarter-on-quarter - as did BT's share of landline-to-landline calls. The operator now has 63 per cent of the consumer market and 42 per cent of the business market.

Turnover as a whole at BT dropped by three per cent. The telco is making progress on its net debt, however, which has been cut by 10 per cent since the third quarter of last year.