Debt interest payments and loss making broadband and mobile divisions have hammered BT's bottom line.
The telco made a profit of £186m, excluding one-time charges, on revenues of £5.45bn for the three months to the end of June. For the same period last year, BT made a profit of £637m on revenues of £4.7bn.
Despite cutting debt from £27.9bn to £17.5bn in the last three months, BT had to pay £474m in interest charges, almost double the £239m it paid in the same period last year.
Last year's £45m profit for the same period at BT's mobile division, BT Wireless, turned into a £95m loss. The company is expected to spin off its wireless division later this year. BTopenworld and BT Ignite continued to lose money.
Analysts believe that BT should have demerged its mobile division before now, and that the delay has wiped away a quarter of its market value.
The results also show that BT's Concert joint venture with AT&T lost £81m. The two telcos have long been rumoured to be on the verge of ending the three-year alliance.
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