BT reports a 24% jump in quarterly profits amid revamp

BT has posted what it calls a "strong set of results" after seeing a 24% rise in pre-tax profits to £862m in the three months to the end of December.

Third quarter revenue rose 3% to £4.59bn, up 4.7%, which it said was its best result for more than seven years.

It has also announced a new corporate structure following the completion of its deal to buy mobile firm, EE.

That deal brings together the UK's largest fixed-line business and the largest mobile telecoms company.

Chief executive Gavin Patterson said: "BT Consumer had a stand-out quarter, increasing its overall line base for the first time in well over a decade and capturing 71% of new broadband customers."

He added that he was confident they would "deliver the anticipated cost and revenue synergies" from its acquisition of EE.

Russ Mould, a telecoms analyst at AJ Bell, said BT was in a "buoyant mood" following its takeover of EE, but the possibility of having to sell Openreach remained a "cloud on the horizon".

Regulatory uncertainty

Openreach looks after the network of cables and wires, that provide phone and broadband services.

It is at the centre of a report due soon from the regulator Ofcom, which is reviewing the telecoms sector for the first time in a decade.

Critics of BT say it has not invested enough in Openreach, and want it to become a separate business.

Ofcom chief executive, Sharon White, has said one option was "the structural separation" of Openreach from BT.

In January a cross-party group of more than 100 MPs, led by the former Conservative party chairman Grant Shapps, supported a split.

Today BT has announced that Clive Selley is to be the new chief executive of Openreach.

The company said Openreach had connected a net 494,000 new customers, which is a 32% increase.

New structure

BT said that under its restructuring there would be six lines of business:

• Consumer - BT Consumer will serve 10m households with a mix of broadband, telephony, TV and mobile services

• EE - it will retain its brand and serve consumers with mobile services, broadband and TV

• Business and Public Sector - a new division serving businesses and the public sector in the UK and Ireland, pulling together BT Business, EE's business division and parts of BT Global Services that are UK focused

• Global Services - serving multinational companies and financial services organisations with HQs in the UK and across the world

• Wholesale and Ventures - it will offer wholesale services to more than 1,400 communications providers and will include EE's "virtual network" business

• Openreach - it provides rival companies with access to BT's broadband infrastructure

Mr Patterson said: "We will operate a multi-brand strategy with UK customers being able to choose a mix of BT, EE or Plusnet services, depending on which suit them best."

BT's shares were up 3.12% in afternoon trading.

Rival operators

Earlier, Ofcom's Ms White also weighed in on the proposed merger between telecoms giants O2 and Three, warning it could lead to higher mobile phone bills for customers.

The new company would control two in every five mobile connections and reduce the number of networks to three, she wrote in the Financial Times.

"Many of our concerns relate to competition between operators who own the networks on which mobile phones rely.

"Only these four companies can make your mobile signal faster, more reliable and widely available," she added.

Only EE, Vodafone, O2 and Three own their own networks. Other providers, such as Virgin rent space on the airwaves.

Consumer group Which? has also written to the European Commission to express concern about the planned merger of O2 and Three.

Hutchison, the owner of Three, agreed in March last year to purchase O2 from Telefonica for around £10bn.

In October, the UK's Competition and Markets Authority (CMA) asked the European Commission to refer the acquisition for investigation.