New services boosting BT profits

New ventures are helping BT offset a fall in traditional revenues

New areas such as broadband internet connections and computer data services are helping BT offset a further slump in its fixed-line telephone business.

BT, which this week bought US IT firm Infonet, said it had seen a 36% rise in "new wave" revenues as turnover from its traditional services fell by 6%.

It has 3.3 million broadband customers, with connections rising 46,000 a week.

Profits before exceptional items for the three months to 30 September were £549m ($1.01bn), up 4% on 2003.

BT said its turnover rose 1% to £4.6bn, compared to the same period last year.

Challenging environment

The second quarter figures were higher than analysts' forecasts.

But both Merrill Lynch and Barclays Private Clients said they expected full year profits would be "shaped" by BT's under-pressure fixed-line business.

Profits for the half-year fell to £983m from £1.03bn.

New wave services Broadband Data storage Internet telephone calls Wireless networks Check the latest BT share price

BT said its traditional business, faced with competition from fixed-line deals offered by the likes of Tesco, Carphone Warehouse and BSkyB, continued to operate in a "challenging environment".

Its new businesses, which also include internet telephone calls, mobile phone subscriptions, services for online retailers and its Openzone wireless network operation, are showing strong growth, both in the UK and internationally, it said.

"This has been our strongest quarter for almost the last three years," BT chief executive Ben Verwaayen told BBC Radio 4's Today Programme.

"The new stuff is outperforming the losses in the old."

BT's shares were up more than 3% at the close of trade in London.