BT Reports results for Year

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Telco BT has reported financial results for Q4 and its full year saying, “Revenue of £20,076m was in line with our outlook of around £20bn for the year. Foreign exchange movements had a negative impact of £44m and low-margin transit revenue reduced by £214m (including mobile termination rate reductions of £82m). Transit revenue was £1,518m in the year (2010: £1,758m). Underlying revenue excluding transit was down 3%.

Adjusted EBITDA increased by 4% to £5,886m, ahead of our outlook of around £5.8bn for the year. Foreign exchange movements had no significant impact on EBITDA in the year.

Ian Livingston, Chief Executive, commenting on the results, said: “We have delivered profits and free cash flow ahead of expectations for the year, while making significant investment in the business for the future. Free cash flow has nearly trebled compared with two years ago.

“We have consolidated our position as the leading provider of broadband in the UK with our highest quarterly share of DSL broadband net additions for eight years. BT Global Services order intake was up 10% at £7.3bn and it has turned cash flow positive a year ahead of plan. Openreach saw growth in its copper line base in the year, reversing historic trends. Our roll out of super-fast broadband is one of the most rapid in the world, passing an average of 80,000 additional premises each week and we have plans to roughly double the speed of our fibre-to-the-cabinet based service in 2012.

“We expect to continue to grow our profits and free cash flow whilst investing to return BT to growth. These results show we are making progress, but we are well aware there remains a lot more to do.”

Total group operating costs decreased by £1,147m, or 6%, to £17,542m. Depreciation and amortisation decreased by 2% to £2,979m reflecting the lower levels of capital expenditure in the last two years partly offset by higher expenditure on shorter lived assets. Excluding depreciation and amortisation, group operating costs reduced by £1,087m, or 7%, ahead of our outlook of around £900m for the year.

Total labour costs decreased by 5% to £5,845m. Indirect labour costs reduced by 18% as we continue to reduce agency and contractor resource and redeploy existing permanent staff. Direct labour costs remained broadly flat at £4,830m with the reduction in labour resource being offset by pay inflation and increased pension costs. Leaver costs more than halved to £57m (2010: £142m). Payments to telecommunications operators were down 8%, reflecting lower mobile termination rates and reduced transit and wholesale call volumes. Property and energy costs and network maintenance and IT costs were 11% and 10% lower, respectively, as the group continues to drive efficiency improvements. Other operating costs decreased by 5%.