BT has upped its ebitda and cash-flow forecasts after reining in losses at its global services division in the third quarter.
The telco now expects to generate free cash flow of £2 billion ($3.2b) or more this year, two years ahead of its original schedule, after growing ebitda 3% to £1.4 billion in its second quarter 2010, and pre-tax profit by 48% to £406 million.
The global services group cut its operating loss from £91 million to £41 million year-on-year, despite revenues falling £33 million to £1.9 billion on the back of lower wholesale call numbers in mainland Europe.
The division grew ebitda from £43 million to £138 million as UK government contracts contributed to a 50% rise in orders. BT renegotiated key contracts with the new UK government in October, which should help the business unit improve further going forward.
Lower consumer calls and line revenues contributed to a £29 million decline in operating profit at the retail division. Revenues fell £90 million to £1.9 billion, and ebitda £37 million to £414 million, as business sales remained flat on 2009.
However, broadband subscriber numbers grew by 114,000, and the number of subscribers on a 20Mbps or higher fixed-broadband connection hit 1.6 million – a sixfold rise on 2009.
Fiber penetration passed 3 million homes during the quarter, and the firm is picking up 4,000 orders for the service per week.
BT’s wholesale business was hit by a regulatory charge of £19 million and an £18 million drop in low margin transit revenues, causing sales to fall 5% to £1.05 billion.
CEO Ian Livingston said the progress made in improving profits and cash flow enabled the firm to “invest in building the foundations for revenue growth in 2012-13.”
Societe Generale telecoms analyst Saeed Baradar told Bloomberg the figures were “strong.” BT London-listed shares rose 6.22% in Thursday trading.
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