BT has reported a 30% fall in profits. Logo courtesy of BT Group.

BT yesterday reported a 30% fall in profits in its third-quarter results, missing City expectations with shares closing at 237p, the lowest in 18 months.

The group announced that pre-tax profits were down to £447 million for the three months to 31 December 2007. EBITDA increased 2% to £1.47m, falling short of the £1.48m forecast. Revenues grew 1% to £5.15 billion, again below expectations.

Fierce competition in the broadband market is thought to be a major cause of the missed revenue, felt most keenly at BT’s wholesale arm – which saw revenues fall by 11% to £1.2bn.

Price reductions in broadband and the migration of wholesale clients such as Carphone Warehouse and Tiscali to cheaper unbundled lines saw broadband revenues drop by £51m. However, BT Openreach, the division which supplies unbundled lines and hopes to capture some of the lost wholesale revenues, also saw income fall.

The premium-rate phone-in scandal that engulfed television broadcasters also took its toll, with revenues from premium-rate services down £68m.

Ben Verwaayen, BT’s Chief Executive, focused on the successes: “BT Global Services has shifted up a gear, delivering real growth in EBITDA margins. We won total contracts worth £1.9 billion in the quarter, and revenues outside of the UK grew by 22%.”

He continued: “We remain the UK’s number one retail broadband provider with 35% of the installed DSL and LLU base, and BT Vision customers more than doubled in the quarter. We expect continued growth in revenue, EBITDA, earnings per share and dividends, and a significant free cash inflow in the fourth quarter.”

For more information, visit: www.bt.com