As the telecoms giant BT posts third-quarter earnings in line with forecasts and claims 34% of the broadband market, company CEO Ben Verwaayen told “Squawk Box Europe” that broadband is key to the company’s performance and future strategy.
“It is the core of what we do and the margins are going up, not down,” said Verwaayen. “This company is now broadband and global services, if you want to go to the essence of it.”
BT’s approach to the broadband market is to target the higher, valued-added customers and not compete on price according to Verwaayen. He told “Squawk Box Europe” that there is a clear split in the market, “you have people who go for price and you have people that go for value.”
The former UK telecoms monopoly reported underlying earnings before interest, tax, depreciation and amortisation (EBITDA) before specific items and staff leaving costs of 1.44 billion pounds ($2.84 billion) for the three months to Dec. 31 compared with 1.40 billion in the year-earlier period, Reuters reported.
BT's revenue rose 5% to 5.126 billion pounds, ahead of forecasts, helped by a 17% rise in so-called new wave revenues from broadband Internet and corporate networked IT services, areas BT is increasingly reliant upon to counter a decline in its fixed-line business. Analysts had on average forecast EBITDA of 1.44 billion, with estimates ranging between 1.43 billion and 1.45 billion pounds. Revenue forecasts ranged between 5.01 billion and 5.06 billion pounds, Reuters reported.
When asked by “Squawk Box Europe” about the potential of attracting attention from regulators for monopolistic behavior Verwaayen said, “monopoly, I can hardly pronounce the word, this is the most competitive market in the world … we are able to fight but it’s a fighting market so there is nothing for regulators here.”
"After 19 consecutive quarters of earnings per share growth, our expectations are to continue to grow our revenue, EBITDA, earnings per share and dividends for this financial year and next," Verwaayen said in a statement accompanying the results.
Underlying earnings per share rose to 5.8 pence from 5.1 pence.
BT said revenue from its traditional fixed-line business fell 1%, representing an improvement on recent trends.
Shares in the group, already up 5% this year after rising 18% through 2006, closed at 316-1/2 pence on Wednesday, giving it a market value of around 26 billion pounds.