BT profits take a tumble

BT's latest results show the company's first profit fall in six quarters - the result of massive internal restructuring.

In April, BT announced it would be creating two new divisions - BT Design and BT Operate - to assist in the company's transformation from telecoms incumbent to IT services giant. The £450m programme has resulted in a series of voluntary redundancies, largely aimed at eliminating duplication of roles. BT hopes to see the investment pay off within the next two to three years.

Around 2,000 managers have so far taken early retirement, with a total of 5,000 expected by the end of the financial year. According to a spokesperson for BT, this figure is usual for the company, which has a total of around 106,000 employees. BT has also hired 2,500 engineers in the last quarter.

The latest results show that, despite healthy sales, net income has fallen by 29 per cent quarter-on-quarter. BT's spokesperson said this reflects the £182m already spent on the restructuring in the quarter leading to 30 September.

The decline in BT's revenue from its traditional telecoms business appears to be slowing. Revenue was down one per cent year-on-year compared to the four per cent drop in the previous quarter. The company's "new-wave revenue" from IT services and broadband was, however, up 10 per cent on the same quarter last year at £1.9bn, now representing 62 per cent of BT's major corporate revenue.

BT Global Services has apparently won £9.2bn worth of contracts over the last 12 months. BT Retail remains the UK's top retail broadband provider, with a customer base of just over four million.

The company also splashed out £69m on acquisitions in the second quarter, most notably purchasing Basilica, Brightview and Lynx. It only spent £10m on acquisitions in the same quarter last year.

David Meyer writes for ZDNet UK