A rather diffident British Telecommunications Plc describes its third quarter turnover of UKP3,083m and pre-tax profit of UKP695m as satisfactory. The company says that despite a general slowdown in the UK economy, figures for the nine months demonstrate a continuing demand for telecommunication services. Call volume increased both at home and internationally, by 9% and 12% respectively. Inland calls represent UKP1.224m in the quarter, and international calls contributed UKP456m. However, the 10.5% growth in turnover included a 3.2% price increase over a basket of services, with exchange line rentals up by 13.6%. Total operating costs increased by 9.5% over the nine months, by 8.1% in the third quarter, and staff numbers fell by 1,400 in the same period. British Telecom predicts further reductions in manpower over the next two years, but the company was unwilling to provide specific numbers. Net interest charges increased by UKP110m to UKP352m. These reflect higher capital expenditure of UKP761m for the quarter and UKP2,281m for the nine months. The figures also include the cost of financing a 20% share in McCaw Cellular Communications Inc for UKP840m, and the November acquisition of Tymnet for UKP230m. The company experienced a boom in international facsimile traffic, but again, is unwilling to disclose any figures at this stage. As regards Cellnet, British Telecom acknowledges that it still lags behind Vodafone. The company insists that the past six months have seen Cellnet garner 50% of the customer base. It is not prepared to comment on the possibility of acquiring Securicor, and whether managerial changes at Cellnet will bring about a stronger financial performance remains to be seen.
To be vindicated
Also to be vindicated is British Telecom’s UKP840m consideration in McCaw Cellular. The company says that it is long term investment, and claims that McCaw’s impending acquisition of LIN Broadcasting and Metromedia will make the next quarter momentous. It seems confident that McCaw will be a profitable concern. The unanswered question, says British Telecom, is whether it will be sufficiently profitable to justify the initial investment. The company is reviewing a number of activities, including its involvement in cable television. It is not allowed to carry television over the public network, but US companies are not subject to the same strictures. British Telecom says it would like to see that lack of symmetry redressed. It has yet to make any money from cable television, but refused to say if it intends to quit that market. Another area that vexes British Telecom is that of fibre-based communications. It says that it will continue to develop the technology, but the cost of equipment and low market demand means that it is not yet a realistic business proposition. The company spends UKP200m per year on directory enquiries, and says that it has still to decide on the thorny issue of charging for that service. However, British Telecom has already decided not to penalise the disabled, not to charge for payphone enquiries, and has reached an agreement with Oftel that the charges will be offset else-where. It is still fretting over what it perceives as misuse of the 0898 services. It strongly disapproves of phone lines being used to propagate pornography, and categorically denies making money out of it.
