|
British Telecom 4Q net falls
|
 |
May 18, 2000: 6:59 a.m. ET
Profit at top end of expectations amid price squeeze, rising interest costs
|
LONDON (CNNfn) - British Telecommunications, Britain's biggest fixed-line phone company, said Thursday its fourth-quarter profit fell 22 percent as U.K. call charges dropped and interest expenses rose.
Net income for the three months ended Mar. 31 fell to £443 million ($662 million), or 6.7 pence a share, from £568 million, or 8.6 pence, a year earlier. Revenue rose 22.5 percent to £6 billion. BT's full-year pretax profit, which dropped 32 percent to £2.94 billion, exceeded analysts' forecasts of about £2.8 billion.
 "We're under pressure in our U.K. core marketplace and from government policy," Chief Executive Peter Bonfield told CNNfn. "Prices are falling and our competitors are introducing all sorts of new products, but we'll step up our marketing and be more proactive. We'll also cut our costs."
BT shares fell 37 pence, or 3.7 percent, to 958.25 pence in midday trading. Analysts attributed that to a general weakness in European telecom sector, with Deutsche Telecom (FDTE) down 1.9 percent and France Telecom (PFTE) sliding 0.9 percent.
"The general view of the market is that these results are very positive," Dwayne Taylor, an analyst at Robert Fleming Securities, told CNNfn.com. "Competition in the U.K. is tough but they managed to come in slightly above expectations."
Bonfield declined to comment on long-running speculation the company is considering a full merger with U.S. telecom giant AT&T (T: Research, Estimates). "We have two major links through Concert and the wireless operation Advance, " Bonfield said. "On the wider aspects, we'll see what happens."
Bonfield said that funding investment in projects BT has already announced would soak up much of a $25 billion loan facility that BT has arranged. News of the borrowing facility had triggered speculation the telecom company might be gearing up to launch a takeover bid for a rival or a complementary company.
Costly licenses
BT must pay £4 billion to the British government for a third-generation mobile phone license, while it would also bid for a similar license in Germany and would talk to Vivendi (PEX) about increasing its stake in the French company's mobile-phone business Cegetel, said Bonfield. BT (BT-) already own 26 percent of Cegetel.
"They say that the money will be used to pay for licenses, I think you can take their word on that," Taylor said. "But they wouldn't tell anyone if they did plan to make a bid for someone - so who knows?"
BT's shares fell more than 22 percent on Feb. 2 after the company shocked the market by unveiling a slump in third-quarter profit. Since then, executives have grappled with ways to revive the company's fortunes, and investors' perceptions of it.
The company announced plans in April to restructure, creating four global businesses and two U.K. operating divisions, with a view to selling shares in the units.
Operating profit for the year ended Mar. 31 at BT Wireless, which includes Britain's second-largest mobile phone operator BT Cellnet, doubled to £200 million on sales of £4.5 billion. Yell, the yellow-pages directory publishing unit that BT has said it will demerge later this year, made profit of £200 million on a turnover of £600 million.
Operating profit at Concert, a business-services joint venture with AT&T, came in at £300 million while revenue was £1.9 billion. 
|
|
|
|
|
 |
|
