BT Retail Targets Strong Profits Growth

BT Retail has issued new guidance to the City, targeting strong profits growth for the 2006/7 full year. The division said it would achieve EBITDA percentage growth in the teens, around three times higher than analysts predicted at the start of the year. The division also expects EBITDA growth in 2007/8, in contrast to market expectations.

The guidance came as the division provided detailed information for several of its constituent businesses for the first time. BT Retail has annual revenues of £8.5 billion and EBITDA of £738 million. It was revealed today that whilst 42 per cent of its revenues came from BT Business, BT Enterprises and BT Ireland, these three units accounted for nearly 60 per cent of its EBITDA. The remainder was generated by BT Retail’s Consumer business.

Ian Livingston, BT Retail chief executive, said: “Today’s guidance shows that BT Retail has turned around and is set for further profits growth whilst investing for the future. The division is making great progress in every area and not just in the consumer space”.

The new financial targets were accompanied by the news that BT has launched its new Wi-Fi Fusion service for SMEs. This is the UK’s first converged fixed-mobile service for small businesses that uses Wi-Fi technology. The technological breakthrough will enable small companies to benefit from greatly reduced mobile prices when calls are made from their offices or from BT Openzone Wi-Fi “hotspots”. The pricing for the service is also structured so that companies will have far greater certainty over their mobile costs.

The service will be provided by BT Business, one of the units for whom detailed financials were provided today. This unit supports more than 1.1 million small companies across the UK. It provides these companies with voice, broadband and IT services enabling them to sell their services to customers across the globe.

BT Business has annual revenues of more than £2.2 billion and EBITDA of around £225 million. Its performance has been transformed recently and BT today predicted the unit would deliver around 30 per cent EBITDA growth this financial year. BT Business is the UK’s number one business broadband provider with 45 per cent of the DSL market.

BT also said today that BT Ireland will be a one billion pound business within five years. BT Ireland currently has revenues of around £700 million and EBITDA of around £145 million. Both are expected to grow this year. Operating across the whole of Ireland, the unit’s aim is to become the leading provider of networked IT and converged services across Ireland and to increase its share of the total retail market, excluding mobile, to 30 per cent. It has been doing particularly well in the Republic where its share of new broadband additions has jumped to 35 per cent at Q2 2006/7 from only 8 per cent two quarters earlier.

BT also set out progress at BT Enterprises. This unit comprises BT Conferencing, BT Directories, BT Payphones, BT redcare, BT Expedite and BT Enterprises has revenues of more than £550 million and EBITDA of around £130 million. BT today predicted that both revenues and EBITDA for the unit would grow by around 25 per cent this financial year.

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