Profits rise as BT continues to cut costs

British telecoms provider BT reported a 7%increase in third-quarter core profit as it continued to cut costs, and said its recovering Global Services unit would be free cash flow positive this year.

Britain's biggest fixed-line services supplier said today it had gained market share in retail broadband and now had 53% of the market.

It said the results for the quarter to end-December gave it confidence in its outlook.

"These results show that we are making progress on a number of fronts. There is always more to do but our performance underpins our outlook for this year and the period to 2012/13," chief executive Ian Livingston said in a statement.

Total revenue fell 3% to £5.04 billion, in line with expectations, while earnings before interest, tax, depreciation and amortisation (EBITDA) of £1.48 billion was ahead of market forecasts. Pre-tax profits were up a far sharper 30% at £531 million due to a host of one-off factors.

Analysts had expected revenue of £5.05 billion.
Global Services, BT's enterprise unit which Livingston has been restructuring after a period of fast growth but poor profitability, increased its EBITDA margin to 7.1% from 5.8% a year earlier.

BT said it expected Global Services to generate operating cash flow of around 100 million pounds this fiscal year to end-March -- turning positive a year earlier than expected -- and £200 million in 2011/12.