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Earnings: BT Q3 Broadband Revenue Grows 12 Percent; Vision Languishing; Reorg Hits Profit

BT (NYSE: BT) added 178,000 net retail broadband subscribers in the three months to September 30, taking it up to 4.07 million customers and helping bump broadband revenue up 12 percent to £543 million. The growth, which sees it remain the UK’s top broadband supplier, helped group revenue up three percent to £5.09 billion. But quarterly pretax profit slumped 31 percent to £435 million after restructuring to deliver software-driven services over broadband cost £167 million and a range of other capital costs were incurred.

Connections: The company added 301,000 net DSL/unbundled local loop connections but revenue here dipped two percent because of DSL price reductions. Over 300,000 customers now subscribe to the Digital Vault online backup service and 1.9 million now use VoIP via Broadband Talk.

IPTV: Buried in the stats, BT said BT Vision had a measly “more than 60,000” subscribers at the end of October. The service launched in December 2006 and a marketing campaign, which eventually began in May, has included high-profile cross-media efforts so this has to be seen as particularly disappointing. BT said numbers will grow after it today made the package available for direct purchase and self-installation without the expense of an engineer call-out fee (via release).

21CN: The 21st Century Network plan to update BT’s copper wire infrastructure for faster data transfer, first trialled in south Wales, also began trials in the West Midlands last week and further trials are due, leading to a spring 2008 roll-out. 21CN lines will offer speeds up to 24Mbps and there will then likely be a clamor from competitors for BT to charge Openeach with unbundling exchange lines as it did with the standard network. Trials of voice over 21CN continue in Wales and BT reckons it will have the platform available in 170 countries by year’s end.

From the analyst call…

IPTV: Contradictory figures on BT Vision – CEO Ben Verwaayen said the service has over 70,000 subscribers (technically, I suppose “more than 60,000”, as above). That’s up from 46,000 at the end of September but still small growth given the marketing effort. 100,000 units have been sold (75 percent of them being self-installed). Of the on-demand movies, 60 percent are new releases, 40 percent are library titles.

Fon: After BT took an undisclosed stake in the Spanish-based WiFi sharing network, 23,000 of BT’s broadband customers subcribed to the service in the first four weeks, without it having been marketed (ie. 0.57 percent of BT’s broadband retail users are giving their connection away to those nearby).

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