BT shares flourish as profit dips 45 per cent

BT says it is making progress with cost-cutting efforts

BT's stock value increased by more than 12 per cent this morning after the telecoms giant announced better-than-expected financial results for the three months ending 30 June.

Pre-tax profit dipped by 45 per cent to £272m from £497m last year, but BT's cost-cutting programme launched in May is said to have saved the company from the much bigger loss expected by analysts.

BT announced three months ago that it would cut 15,000 jobs, and initiated flexible working packages earlier in July in which some employees were offered a year off on 25 per cent pay.

BT said that it cut 2,300 jobs during the past quarter from its Global Services division, the part of the company hardest hit by the downturn. The unit supplies telephone, internet and security services.

"We have made a solid start to the year against a background of challenging trading conditions," said BT chief executive Ian Livingston.

"BT Global Services is making progress, although there is still much to do. We are on track to deliver reductions in operating costs and capital expenditure of well over £1bn, and to generate group free cash flow of over £1bn this year. "

BT's revenue for the past three months was £5.23bn, a one per cent increase on the £5.17bn reported for the same period last year.