London: BT Group Plc, the UK's largest fixed-line phone company, said first-quarter operating profit climbed 5.5 per cent helped by job cuts.
Earnings before interest, taxes, depreciation, amortisation and costs from job cuts rose to £1.4 billion (Dh8 billion) in the three months ended June 30, from £1.33 billion a year earlier, BT said in a statement yesterday.
Analysts had predicted earnings at £1.39 billion, according to the average of 12 estimates compiled by Bloomberg.
Revenue fell 4.4 per cent to £5.01 billion. Chief Executive Officer Ian Livingston slashed jobs and replaced executives at the global services unit to combat falling sales amid the economic slowdown. The company yesterday confirmed its full-year outlook.
Strong cashflow
"Overall results were good," Mandeep Singh, an analyst at Berenberg Bank in London. "Quarterly cashflow is very strong and consequently net debt is better than expected also aided by lower capex."
BT's debt was £8.9 billion at the end of June, £1.6 billion less than a year earlier.
BT shares advanced 0.8 per cent to 141 pence as of 9.07am in London trading. The stock has risen 4.4 per cent this year.
"We have made an acceptable start to the year, delivering improved financial results while investing in the future of the business," Livingston said in the statement.
The phone company said its pension deficit was unchanged from the previous quarter at £7.9 billion gross of tax at the end of June.
Initial government proposals on changes to pension calculations may lead to a reduction in the liabilities of the BT pension scheme, the company said.
The UK government accounts for about 10 per cent of BT's business, Livingston said on a conference call with reporters.
Negotiations
The company is negotiating with government departments on its commercial contracts as ministers aim to cut costs, he said.
Competing telecommunications supplier Cable & Wireless Worldwide Plc has forecast "somewhat slower growth" in full — year earnings after the government cut back on some investment programs.
To counter declining revenue at its fixed-line retail business, BT has expanded into television services.
BT is offering British Sky Broadcasting Group Plc's Sky Sports 1 and Sky Sports 2 at a discount to the wholesale price.
The company is "happy" with the customer response so far, Livingston said on the call. "Customers recognise that they hadn't been given a choice," he said.
BT said July 22 it has passed 1.5 million homes and offices so far in its high-speed fibre internet rollout. The company is laying fibre past 100,000 premises a week, BT said at the time.
