BT today posted a pre-tax profit of £772 million on turnover which was up 17.6 per cent to £4.98 billion for its first quarter to 30 June 1999.
A 14 per cent increase in operating costs was attributed to fast growth in the mobile and Internet sectors, with payments to other telecoms operators for calls terminating on their networks rising by 50 per cent.
Winning new BT Cellnet customers and supporting high mobile growth was responsible for some of the increased expenditure.
Capital expenditure is also set to rise, as BT prepares to make a massive investment in rolling out asymmetric digital subscriber line (ADSL) technology. ADSL enables Internet access at up to 40 times current dial-up speeds. (see previous story).
The results confirmed that a multi-million pound order for ADSL equipment had been placed in early July, with six million exchange lines expected to be converted by March 2000.
"There is a short-term cost of developing new businesses and acquiring new mobile customers which is reflected in the results," BT chairman Sir Iain Vallance said in a statement.
Growing use of the Internet is proving a boon for the telco’s fixed network division, which saw turnover rise by 3.2 per cent to £1.29 billion.
Revenue from mobile communications soared by 64 per cent to £508 million, partly as a result of BT Cellnet’s acquisition of Martin Dawes Telecommunications in March.
The quarterly report claimed good progress had been made in the formation of BT’s global alliance with AT&T and the venture is expected to receive final regulatory clearance later this year.
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