BT's earnings before interest, tax, depreciation and amortisation improved 11% to £1.4bn despite a 4% drop in sales to £5.2bn in the third quarter, the UK's largest telco reported today.
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The recession affected all divisions as revenues slid across the board. Earnings at BT Global Services, which has had three CEOs in 18 months, rose from £7m a year ago to £123m despite a 3% slide in sales. However, depreciation of shorter-lived software assets pushed the division as a whole to a £71m loss.
BT included in its Q3 results pre-tax costs of £159m for restructuring BT Global Services. This included people and transformation costs and a gross charge of £127m for renegotiating some supply contracts with Tech Mahindra, the Indian software house 31% owned by BT, as part of a rationalisation of procurement channels.
Total capital expenditure was down 27% to £554m for the quarter, and down 28% to £1.7bn on the year to date. This was due to better buying and postponing some capital projects. However, capex was likely to rise in the final quarter, BT said.
BT reported a £9.4bn hole in its pension fund due to bond yields lower by 1.2% and higher inflation expectations of 3.5%. It planned to pay in £535m towards covering the actuarial deficit from an expected free cash flow for the year of £1.7bn.