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No room for BT complacency, said chairman

BT chairman Sir Michael Rake said the previous financial year had been a "year of delivery" at the company's annual general meeting in Liverpool today.

The company wrote off huge losses in the Global Service division, which then endured several bosses in rapid succession in 2008-9, before returning to profit in 2009-10.

Rake said "We have seen cost transformation at Global Services leading to a marked improvement in profitability."

Rake said BT had cut its cost base by £1.8bn and increased its cash-flow by more than a billion pounds to £1.9bn in the 2009-10 financial year.

However, BT faces a £9bn "black hole" in its pension scheme, and is in court seeking a crown guarantee (pledge of support from taxpayers), to cover it.

Last year BT had to increase annual top-up payments for its defined benefit scheme from £280m to £525m until 2011. This, plus losses in Global Services, forced a 59% dividend cut and took away money for investment in superfast broadband.

However, BT said later that it would spend an extra £1bn on top of £1.5bn earmarked for rolling out fibre to the cabinet. This would increase the percentage of UK homes with access to up to 40Mbps broadband from 50% to 66%.

Rake ended by saying that BT was a "much better company than a few years ago" but it could not afford any complacency.


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