BT Q3 Profit Rises, But Revenues Down, Backs Outlook; In Deal With BTPS Trustee

(RTTNews) - Communications services provider BT Group Plc (BT_A.L, BT) reported Friday higher profit in its third quarter, despite weak sales, as all segments posted a decline except BT Consumer. Futher, the company backed its outlook for revenue and EBITDA, a key earnings metric. Separately, BT said it has reached agreement with the Trustee of the BT Pension Scheme or BTPS on the 2014 triennial funding valuation and recovery plan.

BT's third-quarter pre-tax profit grew 12 percent to 694 million pounds from 617 million pounds a year ago. Quarterly earnings per share rose 10 percent year-on-year to 6.9 pence.

Adjusted profit before tax, which excluded certain items, amounted to 814 million pounds, compared to 722 million pounds a year ago. Adjusted earnings per share were 8.0 pence, compared to 7.3 pence last year.

Quarterly revenue, meanwhile, dropped 3 percent to 4.475 billion pounds from last year's 4.6 billion pounds. Underlying revenue, excluding transit, edged down 1 percent.

Segment-wise, revenues from BT Global Services dropped 8 percent to 1.69 billion pounds, and that of BT Business fell 2 percent. BT Wholesale revenues declined 10 percent and Openreach revenues went down 1 percent. BT Consumer segment alone posted a growth in revenue of 7 percent.

Earnings before interest, tax, depreciation and amortization or EBITDA for the quarter grew 2 percent year-over-year to 1.57 billion pounds.

Looking ahead, the company continues to expect underlying revenue, excluding transit in 2015, to be broadly in level with 2014, with growth in 2016. The firm sees annual adjusted EBITDA of 6.2 billion pounds - 6.3 billion pounds in 2015, with further growth in 2016.

The company expects to grow dividends per share by 10 percent - 15 percent in both 2015 and 2016, and intends to maintain share buyback of around 300 million pounds in each of these years, to help counteract the dilutive effect of all-employee share options plans maturing over this period.

Regarding its agreement with the Trustee of the BTPS, BT said the funding deficit at 30 June 2014 is 7.0 billion pounds, with the increase from the 2011 valuation reflecting the low interest rate environment at the valuation date.

A 16-year recovery plan has been agreed reflecting BT's long-term and sustainable cash flow generation. Over the next 3 years payments would total 2.0 billion pounds.

BT said it would pay 1.5 billion pounds by the end of April 2015, out of existing cash and current investment balances, which totaled 2.8 billion pounds at December 31, 2014. This will be followed by 250 million pounds in each of the years to March 2016 and March 2017.

BT and the Trustee will review the funding of the Scheme in the normal way at the 2017 valuation.

Tony Chanmugam, BT Group Finance Director, said, "This agreement is a good outcome for the Scheme's 300,000 members and BT. The increase in the deficit from the 2011 valuation reflects the low interest rate environment. We have agreed a 16 year recovery plan reflecting the strength and sustainability of our future cash flow generation."

In London, BT shares were losing 1.75 percent to trade at 421.60 pence.