British Telecommunications Plc turned in full year results nuch in line with expectations – that is it incurred large hits from price reductions and its redundancy programme, resulting in a slight fall in pre-tax profits. Chairman Sir Iain Vallance had warned at the nine-month stage that redundancies were likely to exceed 15,000, which they certainly did – 18,500 took up the option, resulting in a charge of ú820m, leaving 137,500 people. Finance director Robert Brace told Mark John of Reuters that we expect to lose around 10,000 people in the last such company-wide scheme this year, which will probably result in charges of between ú400m and ú500m, according to Brace. The company has shed more than 100,000 jobs since 1990. Pre-tax profits for the year to March 31 were down 3% at ú2,662m from turnover up 2% to ú13,893m. Price reductions cost the company more than ú800m, but due to more relaxed regulations this would be halved in 1995-96, according to Brace. Turnover from inland calls actually fell by 5% in the year, but volumes were up by 7%. As a result of what he sees as a hostile and unpredictable regulatory environment at home, Sir Iain said that British Telecom is devoting significant efforts to developing its overseas activities. The company was somewhat coy, however, regarding the sales of its Concert venture with MCI Communications Corp: Brace saying only that potential buyers like it a lot. British Telecom’s core domestic market is coming under increasing pressure from cable operators offering discounts of up to 25%, which contributed to residential line installations rising by just 0.7%. Mobile communications proved more lucrative, with turnover from its own operations and its controlling stake in Cellnet Communications Ltd jumping 43% to ú657m. The second half dividend of 10.7 pence resulted in a 6% rise to 17.7 pence for the year. Analysts expressed their hope that the downward trend in exceptional charges should result in the company maintaining its 6% dividend growth. One commented that would be very attractive if they could hold that for five years. However, Brace urged caution. It would not be fair to assume that that dividend growth was secure, citing possible regulatory and competition issues this year. We try to do our best not to surprise our shareholders one way or the other, Brace added.
