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Broadband boosts BT's revenues

Networked IT services help too

BT's profit rose for the last quarter, slightly up on revenue. Performance was dragged down by declines in its traditional offerings but buoyed by services such as broadband and networked IT services, the operator said today.

Revenue for the company's fiscal Q1 reached £4.9bn as of 30 June, up 3 percent from £4.7bn in the same period last year. Profit was up at £464m, compared with £374m a year earlier.

Revenue from what BT calls new-wave services, including mobility, broadband and networked IT services, was up 18 percent on last year, reaching £1.6bn. Within that total, broadband revenue grew particularly well, up 45 percent to £454m compared with last year. Networked IT revenue grew 9 percent to £981m and mobility revenue was up 8 percent to £71m. BT doesn't own a mobile network but sells services to customers via a resale agreement with a mobile operator.

Revenue from BT's traditional businesses, including fixed-line voice, dropped by 4 percent. BT blamed regulatory intervention, competition, price reductions and technological changes for the customer shift from traditional services to the new offerings.

The drop in revenue from the traditional services is more than offset by new services, however, said Ben Verwaayen, BT's chief executive, speaking during a conference call to discuss the results. The increase in revenue from new-wave services has been around £250m each quarter over the past nine quarters, he said. That compares with a decline of around £123m in revenue from traditional services in each of the past nine quarters. "The new-wave business is growing at twice the rate of the decline in traditional," he said.

BT grew its revenue from large corporate customers by 6 percent. New services account for the bulk of revenue from corporate customers, with networked IT services, mobility and broadband representing 58 percent of revenue from large enterprises during the quarter.

Revenue from small and medium-sized businesses remained the same as last year, while revenue from the consumer market was down 5 percent.

Growth in its international business, including winning 200 new customer accounts outside of the UK during the quarter, also helped boost revenue, said BT.

BT continues to work on the implementation of its 21st Century Network, a project that aims to migrate all services from the existing network onto an all-IP network. Initial migration of end-user lines is expected to begin later this year followed by testing, and national migration is scheduled for early 2008. The new network will deliver broadband connections running at up to 24Mbps (megabits per second).

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