BT's turnaround on course as market share and profits rise

STRONG demand for BT's superfast broadband service and growth in market share against its big rivals yesterday provided further evidence of chief executive Ian Livingston's turnaround of the telecoms giant.

Shares in the company rose 3.8 per cent after it said profits had jumped by a fifth in the first quarter of the year.

Although revenues fell at the group's IT services, retail and wholesale divisions they improved at its Openreach infrastructure arm which is investing 2.5 billion in the superfast network.

Glasgow-born Livingston, who took up the top post in June 2008 after a spell as finance director, said the network had now reached more than five million premises and customer numbers had almost trebled in the last six months.

Some 251,000 broadband customers were added in the quarter by companies using BT's network, including Sky or TalkTalk, with 141,000 buying from BT Retail - the highest market share percentage of new connections ever achieved in a market where BT also competes with Virgin Media.

Livingston said: "BT and Sky have been the winners and pretty much everyone else has been the losers. Customers are voting with their feet."

The group said it was on track to meet targets for the financial year after adjusted pre-tax profits rose by 20 per cent to 533 million in the quarter to 30 June. The retail arm grew profits by 4 per cent to 344m, despite a similar drop in revenues as a result of the ongoing decline in calls and line revenue.

Average revenues per customer increased by 4 in the quarter to 330, largely due to the increasing penetration of broadband.

Its formerly troubled global services division, which works with businesses and governments across the world, narrowed losses to 37m. As well as benefiting from cost savings, order intake rose 2 per cent after contract wins including its largest ever deal in Latin America with the Brazilian post office.

Group operating costs fell to 4.16bn in the quarter while labour costs were 3 per cent lower at 1.46bn.

Last quarter, BT set itself tougher-than-expected targets for a turnaround in the next two years after resolving a lingering concern with its pension scheme. It now expects to return to underlying revenue growth by 2013 and forecasts core earnings to be above 6bn by 2012-13. Shares in BT closed up 7.2p at 197.9p.

Meanwhile a High Court judge in London yesterday ruled that BT must block access to a website, Newzbin 2, which provides links to pirated movies.The landmark case is the first time that an internet service provider has been ordered to block access to such a site.

• Rival broadband provider TalkTalk, the UK's third-largest broadband provider, yesterday said it lost 27,000 broadband users overall in the first quarter but saw more customers switching to its own network.

It also said customer service levels had improved with a 40 per cent fall in the number of technical support calls.