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BT Global Services revenues fall two percent

But the division has made a significant recovery compared to last year

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BT’s Global Services division has seen a two percent fall in revenues in the latest quarter, but it highlighted a positive outlook after signing new contracts.

In the company’s second quarter to 30 September, BT’s Global Services made a revenue of £1.9 billion, down from £2 billion in the same period last year. It made an operating loss of £41 million this year, but this was a significant improvement on Q2 2009, when it made a loss of £96 million.

BT said in its results that the revenue decrease “reflected the ongoing trend of declining UK calls and lines revenue, and the impact of lower wholesale call volumes in continental Europe.”

Despite this, the group’s chief executive, Ian Livingston, commented on the fact that “Global Services order intake was up 50 percent at £2.1 billion.” This was an increase from £1.6 billion in Q1 2010 and up year-on-year from £1.4 billion.

Revenues also fell across the BT group as a whole. It recorded a quarterly revenue of £4.9 billion, which had dropped three percent from £5.1 billion last year.

However, the company reported a nine percent increase in pre-tax profit for Q2 2010, to £715 million, up from £656 million in the same period last year.

Livingston said: “We have made significant progress in improving profitability and cash flow, enabling us to invest in building the foundations for revenue growth in 2012/13.

“We have increased our EBITDA outlook for the year and now expect to hit our £2 billion free cash flow target two years early.”

BT Global Services attributed the increase in its order intake to a number of new contracts and extensions. During Q2 2010, these included a three-year extension to the Ministry of Defence’s (MoD) Defence Fixed Telecommunications Service agreement, and a two-year extension of a contract with rail infrastructure operator Network Rail.

BT also signed new contracts with global financial services companies, including UBS for global voice and data services and Nationwide for call centre developments. Its contract wins outside the UK included those with Anglo American, the Spanish Defence Ministry and HeidelbergCement.

The company also mentioned its Memorandum of Understanding (MoU) with the government, which it said would help to deliver savings in government “through greater efficiencies and economies of scale”.

BT added: “We expect to have further discussions with the government about additional efficiencies and opportunities.”

In its retail division, BT said that its business revenue, which comes from IT services to SMEs, was flat, and that its enterprise revenue, which comes from services such as conferencing and security, was “broadly flat”. However, it noted that BT Conferencing revenue had increased by seven percent.

It said that its flat business revenue was an improvement over the four percent decline it saw in the last quarter, reflecting growth in IT services and mobility revenues, as well as an improvement in line losses, which were 41 percent lower than last year.

Separately, in an interview with the Financial Times, Livingston has expressed BT’s interest in using public funds to roll out superfast broadband to most of the UK over the next seven years.

The government has previously said that up to £830 million could be used from BBC licence fee funds to help enable this expansion.

“We think we could get to over 90 percent of the UK...2017 is not an unrealistic timescale,” Livingston told the paper.

However, the Financial Times pointed out that BT will have to bid for the funding, competing with rivals such as Virgin Media.

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