BT profits hit by restructuring

BT is in the middle of a costly restructuring process

There has been a sharp fall in three month profits at BT, hit by £76m worth of restructuring costs.

Britain's biggest fixed-line phone firm saw profits before tax and after exceptional items fall 30% to £447m ($876m) in the last quarter of 2007.

But the group reported strong growth in its broadband and global services divisions, where profitability grew.

BT's retail unit achieved a 35% share of all new broadband connections during the three month period.

BT's shares have fallen sharply from their level of 320 pence a year ago. They ended Thursday trading down 9.8% at 237 pence.

Transformation programme

"This has been another solid performance," said BT's chief executive Ben Verwaayen.

"We remain the UK's number one retail broadband provider and BT Vision customers more than doubled in the quarter."

BT Vision is the company's television service, which currently has more than 150,000 customers.

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Pre-tax profits excluding exceptional items fell 7% to £601m.

The £76m of restructuring costs are described by BT as being mostly taken up by costs linked to managers leaving, and its transformation programme.

BT is in the process of reorganising itself to concentrate more on broadband and software services.

Tax credit

It had 4.25 million broadband subscribers at the end of 2007.

Its revenue was lower than expected, hit by an 11% fall in wholesale revenue, which is the money that it makes by providing bulk services to other telecoms companies.

Neil McCartney from McCartney Media said that the fall in profits look bad because the figures for the last three months of 2006 were boosted by a tax credit.

"It's not as bad as it looks," he said.