BT announces drop in profits

NEWS BT has posted first quarter results showing a rise in turnover of over 10 per cent, but the telco's pre-tax profits have slipped to £723m, down 17 per cent on the same period last year. For the three months ending 30 June, turnover was £4.2bn, reflecting increasing revenues from new services and European ventures. Inland call revenue also grew, by 1.3 per cent to £1.3bn. However, losses from Cegetel - BT's joint venture in France - totalled £5m, while the company's share in Germany's Viag Interkom produced a loss of £44m due to investment in Viag's fixed and mobile networks. Among other reasons for the decline in profits were increased payments to other telecoms operators and severance pay for 2,000 employees leaving the company. BT chairman, Sir Iain Vallance, said recent investments in Asia and the deal to combine the company's international operations with AT&T will "enhance our capability to serve our customers worldwide and are significant steps towards achieving our vision of becoming the most successful worldwide telecommunications group".