BT profit up but sales fall

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Super-fast broadband put some zip into telecoms giant BT’s profits in the last three months, despite lower revenues.

The group sped up the delivery of its super-fast broadband network last year, with 10 million homes and businesses now having access “months ahead of schedule”.

Underlying pre-tax profit rose 16 per cent to £2.4 billion in the year to 31 March, driven by super-fast fibre arm Openreach where underlying profits rose by 12 per cent in the fourth quarter.

Profit growth for the year was also boosted by deep spending cuts and operational efficiencies. Underlying operating costs were six per cent lower for the year.

However sales were down four per cent to £4.9 billion for the quarter as BT wholesale continued to shrink.

Ian Livingston, chief executive, said: “In what remains a challenging environment we have delivered another year of growth in profits and free cash flow. “

BT said it will pay a full year dividend of 8.3 pence, up 12 per cent from last year as it freed up an extra £290 million in free cash flow during the final quarter.

It also expects dividends to rise by between 10 and 15 per cent, each year for the next three years.

Broker Jefferies said although the dividend policy may disappoint initially it believes BT’s dividend outlook contrasts favourably against its peers.

The broker gives a ‘buy’ stance and price target of 268 pence.

“We have made progress again this year delivering for all our stakeholders, but we know there is more to do,” added Livingston.

BT said its worldwide business sector BT Global Services won £2 billion in the final quarter, which was 1.8 per cent lower than analyst consensus.

BT also paid a £2 billion payment into its pension fund during the year, one of the biggest one-off payments made by a company into a pension fund.

The company added it will commence a share buyback programme of around £300 million in 2013.

Livingston added he expected underlying revenue, excluding transit, to show an improving trend in 2013 and 2014, and that BT would also grow underlying earnings over the next two years.

The share price was down 1.4 per cent to 214 pence this morning. Poactiveinvestors