Openreach Bails out BT Profits

Profits have tumbled at BT in their third quarter to December 2008. Operating profit fell 62% to £277m compared to the same period last year. The biggest profit maker in the group following the fall in their Global Services Division is now BT Openreach who contributed 53% of the group EBITDA.

Ian Livingston, Chief Executive, commenting on the third quarter results, said: “Three of our businesses performed ahead of expectations in the quarter and the group, excluding Global Services, delivered the best year on year profit growth for five years. However, as previously announced, the group results have been severely impacted by the performance of our Global Services division.

“We need to build a solid base in Global Services from which we can deliver positive cash flows. We have already announced changes in management and are making significant financial and operational changes to the business. We are also trying to change the division’s cash flow profile to ensure it’s less concentrated towards the fourth quarter and, as a result, fourth quarter cash inflow in Global Services will be significantly lower than last year’s exceptionally high figure.

“With our focus on improving the performance of Global Services, continued cost savings and control on capex across the group, we expect group free cash flow, before any pension deficit payments, to be over £1bn next year.”