Flagging outsourcing biz and sports rights weigh down BT profits by 4%

Consumer-facing bit good, enterprise... not so much

BT reported a 4 per cent drop in net income to £1.8bn for its second quarter as sports TV rights costs and its underperforming outsourcing biz hit the bottom line.

Overall sales fell 2 per cent to £5.9bn for the three months to September. Revenue for Global Services dropped 10 per cent to £1.26bn, with total earnings plummeting 39 per cent to £81m.

The UK's largest telco said it was hit by costs of improving customer experience, higher pension costs and business rates. But it reckoned that strong results for mobile network EE and various savings helped to go some way in offsetting the decline in Global Services.

Sales at its mobile division rose 4 per cent to £1.3bn, with net income up 16 per cent to £326m.

Earlier this year the business announced it would slash 4,000 jobs, mainly in Global Services, Technology, Service & Operations, and Group Functions.

So far it has axed 1,500 managerial and back-office roles, with a further 1,500 positions expected to be shed in the second half of the year and another 1,000 to go in 2018. When the programme is complete, it expects to save £300m.

Gavin Patterson, BT chief exec, said: "Our first-half results are in line with our expectations as encouraging results in our consumer-facing lines of business, notably EE, helped offset ongoing challenges in our enterprise divisions, in particular Global Services."

He said the firm's integration programme with EE and job cuts are expected to save it £250m and £150m respectively by the end of the year.

"We are working closely with the UK government, Ofcom and our communications provider partners to find the right solutions to accelerate the deployment of fibre and our universal broadband commitment. We are committed to delivering ultrafast speeds to 12 million premises by the end of 2020."

During the quarter, BT said it had connected 505,000 fibre customers, now providing more than 21 million homes with ultrafast broadband speeds of 24Mbps.

BT has volunteered to deliver the government's aim of universal broadband access with a minimum speed of 10Mbps, which it said would cost between £450m to £600m. ®

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