British Telecommunications Plc yesterday reported the first full-year profit decline since the telecommunications giant was privatised. That said, trading profits for the year to March 31 slipped only 3% to UKP3,415m, while the pre-tax and net figures were down less than 1%, at UKP3,073m and UKP2,074m respectively. Turnover for the year was up 1.4% at UKP13,337m. Fourth quarter trading profits were off 11% at UKP804m, pre-tax down 7% at UKP704m and net off 8% at UKP475m, on revenues more or less flat at UKP3,413m. Chairman Iain Vallance blamed the fall in profits on the recession, regulation and competition, in that order. Not that he’s really got anything to worry about. BT still feels it has to defend its levels of profitability and the BT Newline – a freephone line for BT staff – was yesterday offering employees advice on what to say when challenged by the press on the UKP97 profit which BT is making every minute: trying to put this figure in perspective, Iain Vallance notes that the group pays out UKP140 a minute on wages and salary, UKP77 on network investment and UKP38 on government taxes and dividends (the figures changed overnight – CI No 1,926). Vallance’s personal salary, always of interest, has been increased 3.3% to UKP465,000, though his annual bonus has been cut to UKP90,000, from UKP150,000 to reflect the group’s performance – the BT Newsline assures staff that this again will be donated to charity. Meanwhile, the other directors get a 3.5% pay increase, but a lower bonus pay-out. Eligible BT people get their hands on a UKP38m profit-sharing pay-out, by way of free shares – as time goes by this should mean a greater amount per person, since BT is working hard to hack away at the names on the payroll – 18,000 jobs were cut in 1990-91, a further 16,400 in the year just ended, and 24,000 more positions will be axed over the current year, leaving a UK headcount of around 185,000. Group managing director Michael Hepher confirmed that this figure will continue downwards for quite some years. (Employees are offered a generous voluntary redundancy package, comprising cash, counselling and advice on how to set up as a consultant). Inland telephone calls were flat at around UKP5,171m, inland call volume growth at under 1%. International call revenues declined by 1% to UKP1,793m; call volume growth – at 4% – due to a buoyancy of transit traffic, was more than offset by the effect of price reductions, including the 9.6% overall reduction introduced in September for outgoing international calls. Telephone exchange line rental revenues grew by 12% to UKP2,117m, mainly as a result of price increases implemented as part of BT’s rebalancing policy. The number of exchange line connections was up just 1% over the year. Income from other operators, which pay BT to use its vast network, grew 22% to UKP281m in the fourth quarter, 20% to UKP1,079m in the year. Cellnet exceeded 50% of network connections over the 12 months, which was a first for the mobile operator, which is 60% owned by BT, 40% by Securicor Group Plc. Cellnet’s figures were not given, though Vallance was able to say that the firm had seen a growth in revenues and a considerable growth in profits. Its call-back messaging system, recently launched and well publicised on national television, has proved to be successful and, as a result, British Telecom will at some time in the future be introducing an equivalent embedded answering machine messaging system for its fixed-line networks. On the competition, BT says that while Mercury Communications is a force to be reckoned with, it is fighting back, and is going back to Mercury’s large corporate customers and persuading them that there is no longer a wide price differential between the two groups, and that BT has a far superior customer service record. Vallance sees one of BT’s largest threats as coming from the cable television quarter, where companies that are busily cabling the UK’s major cities are simultaneously offering customers cable television and telephone services.

Cable TV sales rep

Vallance

quipped that he’d had a sales representative round at his own house, and that his sales pitch had been wonderful the BT chairman says he took the cable television, but declined the telephone service. Speaking further on BT’s customer service record, Hepher noted that this was improving noticeably, with the vast majority of the 100,000 BT payphones now in working order and only one call in 250 now not getting through because of a fault on the network. BT’s customer service record, he said, would improve, while the number of staff would consistently fall. The group has at last re-designed its customer bills – it’s been 30 years since they were last re-thought, and they are the single biggest reason why customers get in contact with BT. It won’t be until autumn though that the new bills are sent out; we’re sure customers will wait with bated breath. Meanwhile, BT is planning international expansion, focusing on North America, Western Europe and Japan and the Pacific Rim, where possible gaining licences to provide telephony services as well as data communications.