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BT heads back into black

Alex Scroxton
BT has breezed past its previous forecasts after posting full-year profit of £1.02bn - marking a return to profit after posting massive losses in 2009 - on total sales of £20.9bn, down slightly on the previous year.

The UK comms and networking services giant also posted Q4 profits of £209m, reversing a £1bn loss in the year-ago quarter, and revenues of £5.3bn.

BT came a cropper during the recession thanks to the abysmal performance of its enterprise ICT services arm, BT Global Services, but it appeared today that the declines had been arrested, with underlying revenues flat in the quarter, and order intakes heading back up.

BT said it had made further progress with its cost saving initiatives at the troubled unit, and now claims to have delivered a reduction of 6% in underlying operating costs both in Q4 and the year as a whole. It has also sadly cut close to 6,000 jobs.

It expects the unit to start returning positive results in 2011-2012.

Despite the positive performance turned in, BT Global Services still drew some criticism from analysts for its apparently confused business model.

Anthony Miller of TechMarketViews said: "Not all of BT GS' revenues come from what we would recognise as IT services. And indeed, not all of BT's IT services activities are in BT GS. 

"It really troubles us that there is still no coherent 'knitting pattern' for BT GS to stick to," he added.

At its other major units, BT Retail saw sales decline slightly due to an ongoing and seemingly unstoppable decline in its call and line revenue, while BT Wholesale also dipped thanks to low margin transit revenue declines.

BT CEO Ian Livingston reflected on "good progress this year", saying: "We have improved customer service, are transforming the cost base and have more than doubled free cash flow, but there is still a lot more to do."

"During the next three year period we expect to improve our underlying revenue trends and grow EBITDA and free cash flow, while investing in the business, supporting the pension fund, reducing net debt and paying progressive dividends," he added.

The firm also pledged further investment in its next generation broadband programme today, putting an extra £1bn in the pot.

It now hopes to be able to provide superfast broadband to two thirds of UK homes by 2015.

This came alongside renewed investment in its BT Vision service, which has struggled to gain traction in the BSkyB-dominated market.

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