BT Profit Advances in Third Quarter as Broadband Subscriptions Increase
Stock Chart for BT Group PLC (BT/A)
BT Group Plc (BT/A), the U.K.’s largest Internet service provider, raised its full-year forecast for operating profit as it gained more broadband subscribers.
Full-year earnings before interest, taxes, depreciation, amortization and costs from job cuts will exceed 6 billion pounds ($9.5 billion) in the 12 months through March 31, a year earlier than the London-based company initially forecast, it said in a statement. Analysts surveyed by Bloomberg had estimated Ebitda of 5.97 billion pounds.
“We have delivered another quarter of growth in profits and cash flow despite the economic headwinds,” Chief Executive Officer Ian Livingston said in the statement.
BT has stepped up competition with operators including Virgin Media Inc. (VMED) as it accelerates its 2.5 billion-pound rollout of fiber broadband by one year. Virgin Media said last month it will double most of its customers’ speeds. BT, the U.K.’s largest fixed-line phone company, is counting on its high-speed broadband services to offset declining sales from traditional landline offerings.
BT, which has started a triennial assessment of its pension program, may pay down a “significant” portion of the deficit early, Livingston said today.
“From the pension trustees’ point of view, getting money into the scheme is good,” Livingston said. “There’s also an advantage from a tax point of view.”
The company said today its pension deficit increased to 4.1 billion pounds in the quarter through December, compared with a deficit of 2.5 billion pounds at the end of September. Under the prior agreement the company agreed to make annual payments of 525 million pounds through December 2011.
BT added 146,000 broadband subscribers in the quarter, compared with British Sky Broadcasting Group Plc (BSY)’s addition of 166,000. BSkyB announced this week it will offer a fiber product for the first time on BT’s network even after saying it had seen little demand for the service.
Third-quarter operating profit climbed to 1.52 billion pounds, beating the average estimate of analysts surveyed by Bloomberg.
BT also faces potential competition from Fujitsu Ltd. (6702), Japan’s biggest computer-services provider, which said last year it wants to tap BT’s infrastructure to build a rival fiber network to 5 million homes and businesses for as much as 2 billion pounds.
The company’s Internet-connected TV platform YouView won’t start before the middle of this year, Livingston said. The venture with the British Broadcasting Corp. had been scheduled to start early in 2012 after repeated delays.
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