Cost cuts help BT profits rise

Cost cuts helped bump up BT profits

Telecoms giant BT has rung up a 56% rise in profits, but said the rise was down to cost-cutting and not increased turnover.

Underlying first quarter profits soared to £502m ($812m) from £322m in the same period last year.

Recent restructuring, including a rolling programme of 5,000 jobs cuts a year, had helped the firm cut its debts to below £9bn - down a third on last year.

Chief executive Ben Verwaayen said: "Our focus on financial discipline, defending our core business and creating new business streams continues to deliver results."

Turnover unchanged

But the company added that year-on-year turnover remained unchanged at around £4.6bn.

Investors also fretted over a 3% fall in the group's core land-based telecom business, which BT put down to increased competition from rivals such as cable operators.

So-called "new wave" products currently account for less than 10% of BT's revenues - despite that part of the business growing 23% in the April to June period.

It has concentrated on fixed-line services and internet connections since hiving off its MM02 mobile arm in 2001 - a move questioned by many experts.

Mobile return

But this week it announced a return to the fast-growing sector in a tie-up with German group T-Mobile.

Mr Verwaayen said "defending the core and growing the new" would be the strategy for the future.

He added BT's four "growth engines" are broadband internet access, mobility, computing and corporate services.

"The top line will depend on how you are doing in the new wave and how robust you are in your defence of the traditional business."

Shares in BT fell 4% to 195.75 pence.