BT plans cheaper broadband

Take-up of high-speed internet access in the UK has been slow

British Telecom has said it plans to cut charges for access to its broadband network, which should lead to cheaper high-speed internet access in the UK.

We need to underwrite broadband Britain

Ben Verwaayen, BT Group chief executive

The company's new chief executive Ben Verwaayen told reporters the company planned to announce "substantial" price cuts in the service in coming weeks.

The news came as BT unveiled their results for the October to December period, which showed a slightly better than expected pre-tax profit of £381m excluding one-off items.

Over the past year BT has changed significantly. It has sold off a number of businesses to cut its debt, and most significantly demerged its mobile phone arm - renamed MMO2 - in November last year.

By lunchtime in London shares in BT had jumped 7.8% to 244.75p.

Charges cut

The reduction in broadband charges is expected to give a shot in the arm to the roll-out of high-speed internet access in the UK.

Ben Verwaayen said the latest results provided a 'solid foundation' for the future.

Britain has lagged behind other developed countries in the take-up of broadband services, with many critics blaming the level of BT's charges for the slow progress.

But BT's new boss now says this is about to change.

"We need to underwrite broadband Britain, " Mr Verwaayen said.

He said the reforms to be announced would "involve a substantial cost reduction on the wholesale side to allow all partners to have a fundamental repricing."

The firm's wholesale arm charges internet service providers - including BT's own Openworld service - from £25 a month to use the broadband technology.

New look BT

The BT reporting results on Thursday is a very different beast to the BT of a year ago.

The company has undergone some drastic restructuring in an attempt to reduce its debts and turn the business round.

The biggest change came last November when it span-off its mobile phone operation BT Cellnet into a new company - which has been renamed MMO2.

The pre-tax profit figure for the latest quarter of £381m excluded a number of one-off items which also show how busy the company has been.

They include a £900m profit from property sales, and a £58m charge for the shutting down of Concert - its ill-fated joint venture with the US telecoms company AT&T.

Earnings before one-off items edged up slightly to £1.51bn from £1.49bn a year earlier, while turnover from ongoing activities rose from £4.37bn to £4.66bn.

BT also said its debt had been trimmed by a further £2.9bn to leave it at £13.6bn.

"BT's third quarter results provide a solid foundation for the future," said Mr Verwaayen.