BT returned a profit in the last quarter, despite falling sales as its customers reduced spending.
The UK-based operator registered a six percent year-on-year decline in quarterly revenues to €5.8 billion.
Profit increased 17 percent to €575 million.
“We have delivered another quarter of profit growth and the 11th consecutive quarter of double-digit earnings per share growth,” commented CEO Ian Livingston.
However, the numbers fell short of analyst estimates and BT’s share price had fallen over four percent by mid morning on Wednesday.
Ovum analyst Carrie Pawsey added that BT’s profitability was a result of cost-cutting rather than revenue generation.
Gartner analyst Katja Rudd told European Communications that BT still had more work to do to reduce its cost base and that there was still a duplication within the organisation.
All their major business units saw revenues decline with the exception of Openreach, whose sales remained flat.
Global Services fell nine percent, Wholesale eight percent and Retail three precent.
Despite winning contracts from blue chip companies such as Rolls Royce, Tesco and Unilever, Global Services revenue fell due to lower order values and longer lead times, according to a statement.
In particular, the company said problems in Europe and the financial services sector had hit them hard.
“Yet again Global Services was the worst performing division,” said Pawsey.
“It makes up around 38 percent of BT’s total revenues and [its performance] is an on-going concern.”
However, Rudd said BT was performing well in the enterprise segment when benchmarked against other operators.
“BT has improved and is doing better than its peers. It has raised the bar to some extent, but this does not show up in quarter to quarter earnings.”
But she added that enterprise requirements are getting tougher.
“All operators must continue to make the cultural shift to apply their portfolio to enterprise customers’ strategic objectives – it is critical they maintain urgency in this regard.”
A decline in transit revenue driven by mobile termination rate reductions, meanwhile, was blamed for the fall in Wholesale revenue.
Growth in broadband – BT added over 150,000 fibre broadband customers – and an increase in ARPU could not offset the decline in call numbers and lines in the Retail division.
However, Rudd said that the improvements in its broadband strategy were a definite positive.
Livingstone added that the company’s financial performance allows it to keep investing for the future.
“Our engineers are rolling out fibre at pace bringing fibre broadband to over two million more homes and businesses in the quarter and it’s now available to over 11 million premises,” he said.
In addition, BT has spent big on Premier League football rights and was a lead partner in the newly launched YouView IPTV service.
“BT is showing a level of urgency currently that hasn’t been seen over the last decade,” concluded Rudd.
The challenge for Livingstone and his team is to translate this into concrete revenue growth.
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