BT hails broadband progress

Telecoms group BT reported a 71 per cent rise in profits today after more than £1bn of cost savings helped it overcome a four per cent drop in revenues.

The bigger-than-expected improvement in full-year profits to £1.7bn was helped by the company’s continued success in broadband, with the proportion of customers signing up to its own service now at an eight-year high.

BT said 252,000 customers were added by companies using BT’s network, such as Sky or TalkTalk, of which 64 per cent signed up with BT.

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The retail arm grew profits by two per cent to £1.34bn, while the company’s formerly troubled Global Services division, which caters for businesses and governments across the world, narrowed losses to £141m.

Cost savings were higher than the £900m targeted but unlike the previous financial year, when the company saved £1.75bn, job losses were not the main driving force behind the efficiency gains.

Stripping out one-off charges from last year, adjusted profits were 20 per cent higher at £2.1bn.

BT added that its pension scheme was in better health, with the valuation deficit down from £9bn to an estimated £3.2bn.

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But it has so far been unsuccessful in persuading the pensions regulator to provide an updated assessment on the fund after it raised “substantial concerns” 15 months ago about an agreement with trustees to plug the deficit.

A deal with the regulator is seen as key in paving the way for a rise in the company’s dividend payments to shareholders. Today, the company announced a seven per cent rise in its full-year dividend to 7.4p a share.

Chief executive Ian Livingston said: “These results show we are making progress, but we are well aware there remains a lot more to do.”

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