Ahead of changing of guard, BT says has right plan

By Paul Sandle

LONDON (Reuters) - BT's outgoing boss said the group's recovery plan was delivering after more sales of high-end smartphones and cost savings across the business helped the telecoms company achieve higher than expected first half earnings.

Shares in BT, the market leader in both broadband and mobile, rose more than 7 percent by 0855 GMT after it nudged its guidance for the full year higher and earnings rose 2 percent in the first six months.

Analysts at Citi, who have a "neutral" rating on BT, said the results were "solid with steady improvements in the underlying trends".

Chief Executive Gavin Patterson, who will be replaced by Worldpay's Philip Jansen from February, said the group was improving customer service, accelerating the roll-out of full-fibre networks and making progress towards transforming its operating model.

 

"Despite increasingly competitive fixed, mobile and networking markets and continued declines in legacy products there is no change in our overall outlook for the full year," he said, adding that based on current trading the company expected earnings to be in the upper half of its range.

Patterson has run BT for almost five years and announced some 13,000 job cuts earlier this year as the company struggled with intense competition and an underperforming IT services unit.

Chairman Jan du Plessis said in June that while the board was confident in Patterson's strategy, it doubted his ability to deliver it.

Patterson said the progress indicated that the plan he outlined was working and he intended to maintain the momentum as he prepared to pass the baton.

"We were confident of our strategy when we set it out in May and the strategy had a three-to-five year horizon," he said.

"It's my complete focus to make sure we get off to a fast start and I think we've done that in the first two quarters."

BT posted adjusted half year core earnings of 3.68 billion pounds ($4.74 billion) and said it expected earnings for the year to be at the upper end of its 7.3-7.4 billion pound range.

Adjusted revenue slipped 1 percent to 11.62 billion pounds as regulated price reductions in its broadband network, which serves other operators as well as BT, and declines in its enterprise businesses offset growth in consumer.

BT said BT Plus, its first high-end converged consumer product, now had around half a million subscribers, up from more than 100,000 at the end of June.

Monthly churn in both its fixed and mobile customer bases ticked up to 1.6 percent and 1.2 percent respectively.

($1 = 0.7767 pounds)

(Reporting by Paul Sandle; editing by Sarah Young/Keith Weir)