BT's Broadband Services Power Earnings -- Update

(Updates, adds detail.)

By Simon Zekaria

LONDON--BT Group PLC (BT.A.LN) on Monday said it revamped its corporate structure after jumping back into consumer mobile services and hailed its prospects, as the company posted a rise in quarterly earnings powered by take-up of fiber-optic broadband services.

The 169-year-old telecom company recorded net profit of 796 million pounds ($1.14 billion) in the third quarter to Dec. 31, up from GBP558 million in the same period a year earlier.

Pretax profit before exceptional items was GBP928 million, up 14% year-on-year. On a reported basis, it rose 24%.

Revenue, also before exceptional items, increased 3% to GBP4.59 billion. Also adjusted but excluding currency effects, acquisitions, disposals and transit sales, revenue increased 4.7%, which the company said is its best result for more than seven years.

"This is a strong set of results with good numbers across the board," said Chief Executive Gavin Patterson.

The company reiterated its profit outlook for the 2016 fiscal year. It sees adjusted revenue excluding transit growing between 1% and 2%, even as it said the booking of historical pricing revenue based on call charges will hurt its top line fourth-quarter performance.

BT is in a fierce battle for subscribers against telecoms and media services rivals such as Vodafone Group PLC (VOD.LN), Liberty Global PLC (LBTYA) and Sky PLC (SKY.LN), as its builds out its connected Internet, telecoms and pay-television businesses. It has plowed billions of dollars into sports TV channels, including English Premier League soccer rights, and acquired mobile operator EE for $19 billion last year to bolster its position.

It has also countered industry criticism that its reach is too powerful through deployment of network services through its infrastructure division Openreach, which lays down most of the country's telecom lines. The network allows rivals to reach customers through wholesale charges.

Mr. Patterson Monday said Openreach should be functionally separated, but stay part of BT.

"We have a model that works," he said, adding that complete separation would create "instability" in the market.

BT's consumer business posted revenue growth of 11%. BT said its super-fast fiber broadband network is available to over 24 million households and businesses and the quarter recorded 494,000 fiber broadband customers, up 32%. It also added 97,000 TV customers.

From April, the company is changing its corporate structure into six divisions to accommodate its new mobile business EE and it has also created a new division that will focus on U.K. businesses and the public sector.

It said it has more than 300,000 mobile subscribers. Mr. Patterson told reporters BT will retain both BT and EE brands for its mobile services.

At 0856 GMT, shares were up 2.5% at 497 pence, valuing the company at GBP48.3 billion.

Citi analyst Simon Weeden said the company had posted strong figures, ahead of the broker's forecasts. He added that the company is making a "sensible" reorganization of the business to accommodate mobile services.

Write to Simon Zekaria at [e-mail]

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(END) Dow Jones Newswires

February 01, 2016 04:42 ET (09:42 GMT)

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