BT Group Plc, the former telecoms incumbent in the UK, continues to offset the decline in its traditional fixed-line business, with strong growth in so-called “new wave” products.
For the first quarter ending June 30, the carrier posted profit before taxation, goodwill amortization and exceptional items down 13% at 434m pounds ($792m). The decline was mainly as a result of the 102m pound ($185m) cost of shedding another 1,000 workers. Net income was down at 319m pounds ($581m), from 354m pounds ($644m) in the year-ago quarter.
The carrier continues to lose traditional fixed-line customers to rivals, as revenue slipped 0.4% to 4.57bn pounds ($8.32bn), from 4.58bn pounds ($8.34bn). The decline reflected the impact of mobile termination rate reductions. BT said sales would have been up 0.8% excluding the impact. Net debt was 7% lower at 8.31bn pounds ($15.13bn).
The transformation of our business continues at pace, said Ben Verwaayen, chief executive. This is the second consecutive quarter of underlying growth in turnover…This strong growth in new wave has offset the decline in turnover from the traditional business and these results reflect a continuation of recent trends.
BT’s share of the UK fixed-line telecoms market is 70%. This was down from 72% in the last quarter, and BT puts the decline down to the rise of mobile phones, and competition from the Carphone Warehouse’s TalkTalk service and Centrica Communications’ OneTel.
Sales in BT’s traditional businesses declined by 6% on the year, whereas new wave business sales rose 32% to 936m pounds ($1.70bn). New wave businesses generated more than 20% of group revenue in the quarter. The new wave revenue stream comes from the business generated by managed services, as well as new technology such as broadband internet access, business technology contracts, and mobile telephony. Going forward, these are areas that BT will be increasingly relying upon to offset the decline in its fixed-line business.
Revenue generated by its information and communications technology division in the quarter was 634m pounds ($1.15bn), representing year-on-year growth of 15%. The mobility division reported revenue of 43m ($78m) for the quarter, an increase of 169% over the same quarter of last year, while revenue from broadband doubled to 186m pounds ($338m), BT said.
The total number of broadband lines installed by BT Wholesale rose by 154% over the last year to 2.7 million, with the number actually run by BT Retail doubling to 1.1 million.