As it’s not just one of the most important UK ICT players but also one of the bellwether FTSE 100 companies, BT’s latest results deserve our attention, as they tend to suggest both consumer networking trends but also the appetite for larger firms for the kind of big-scale investment it tends to get involved in – as well, of course, as all its NHS/government ICT penetration.
And the answer is…? Mixed, but showing definite signs of improvement. But it’s the firm’s broadband and television service that are the reasons, not it’s bigger business work. Specifically, for its first 2010 FY six months (Jan-Sep) the company has seen sales fall by 3% year on year (on an adjusted basis; the final figure is £4.98bn) but its similarly adjusted profit was up for a (welcome) change, by 13%, to £496m.
Please note there are various profit figures, all to do with accounting magic; for instance BT has a version of EBITDA, earnings before interest, taxes, depreciation, and amortisation, which shows a £1.4bn figure, up 3%, while actual bottom line profit was 48% up, to £406m. Bean counters, donchalove’em?
Anyway, what matters is that Buzby is making money again – which has to be good, not only for all the ordinary punters who are investors in the group but for UKPlc as a whole.
There are things to carp about. Parts of the business definitely slipped a bit, with Retail’s sales down 4% to £1.9bn and Wholesale down 5%, to £1bn. The firm’s services arm, BTGS, is still a weak sister. Its £2bn revenue contribution was down 2% year on year, and it’s still too expensive to run – operating cash flow at the unit was £20m in the red (though that’s again better than last year, when it was a nasty £103m). Business and enterprise revenues are characterised as flat, which again is not great.
Basically, it’s consumer where the firm is doing best. It now has 520,000 customers of its BT Vision on-demand service, 1.6 million of us use its fast broadband (20Mbps) Infinity service (it added 114,000 more broadband punters in the year to date), which are good numbers, and it did report that its consumer arm Openreach made £1.2bn and was profitable.
But all in all, BT says it will make a decent profit for the full year, of around £6bn at the high end of estimates: "We have made significant progress in improving profitability and cash flow, enabling us to invest in building the foundations for revenue growth in 2012-13," in the words of its CEO Ian Livingston.
That’s healthy, but we’d like to see that Global Services business really get fixed. Of course, the reason it’s struggling is partly things like a general decline in BT’s old heartland fixed-line business stream, but GS was set up to get the firm new work in things like big system integration projects. Looks like it needs to redouble its efforts there – though of course we acknowledge it’s a tough market out there.
But that’s as much a part of BT’s way forward as selling us all more faster home connections.
