BT has bucked the industry trend by upping its dividend by 15 percent despite revenues continuing their downward spiral.
The UK-based operator’s decision to increase its dividend is in stark contrast to its rivals around Europe – France Telecom-Orange, Telekom Austria and KPN are all cutting dividends while Telefonica has suspended its dividend until further notice.
BT CEO Ian Livingston (pictured) said the news demonstrated “confidence in the future of our business”.
However, the dividend rise was accompanied by the news that group revenues fell nine percent year-on-year to €5.6 billion between July and September.
The figure does not include charges relating to wholesale ladder termination pricing, which a UK court ruled should not be applied for 0800, 0845 and 0870 calls from mobile phones terminating on BT’s network.
BT said it was contesting the decision but expects to take a hit of up to €250 million in each of the next two years.
Aside of this, all of the company’s major business units were down.
Global Services was again the worst performer, with sales falling 13 percent to €2.2 billion.
BT said “tougher than expected” conditions were to blame so the reduction of the cost base – net operating costs fell 12 percent in the quarter – was “ongoing”.
The operator appointed a new head for the business unit last month, but Luis Alvarez has a big job on his to turn it round.
He will be hoping for more headline deals, such as the recent news that British American Tobacco is spending €77 million with BT.
Wholesale revenues fell 12 percent to €1.1 billion, but there was slightly better news at the company’s retail division where sales fell were down by “only” three percent to €2.2 billion.
Consumer ARPU rose slightly as BT added 81,000 retail broadband customers in the quarter, representing 47 percent of the broadband market net additions, and 160,000 retail fibre broadband customers.
BT Vision added 21,000 customers in the quarter, with the total customer base now reaching 750,000.
The company announced earlier this week that it had signed the rights to show live top tier football matches from Italy, France, Brazil and the US, as it strengthens its new channel BT Sport.
The channel was announced in June when BT won the rights to show English Premier League football; this was followed in September with the news that UK premiership rugby would also be shown.
Revenues from SMEs, meanwhile, decreased by two percent.
Openreach, which looks after “the last mile”, saw a one percent decline in sales to €1.6 billion, despite fibre broadband roll out being 18 months ahead of schedule.
“We have delivered another solid quarter of growth in profit before tax despite the economic conditions and regulatory impacts,” said Livingston.
“We continue to make significant investments in the future of our business and we are again accelerating our fibre roll-out.”
Profit before tax rose seven percent to €759 million.
He also highlighted the company’s role in the London 2012 Olypmics, which took place during the quarter.
However, the only discernable impact was the trebling of the number of WiFi minutes to three billion.
As we reported in August, BT deliberately deployed much more network capacity than was needed so the suspicion remains that a RoI will be difficult to achieve.
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