Almost £2bn was wiped off the value of BT Group yesterday as the company suffered from rising competition in the broadband market and the wipeout of revenues from television phone-ins.
Shares in the company plummeted from 262.75p to 237p, a 10% fall, in the course of the day after the company revealed that revenues had increased just 1% in the last three months of 2007 to £5.15bn, well below analysts' expectations.
BT's so-called "new wave" revenue from the likes of broadband and corporate networked IT services were up 7%.
Although broadband revenues were up 25%, analysts were worried by the fact it attracted just 177,000 net new broadband customers over the quarter, less than anticipated, amid competition from the likes of BSkyB and Carphone Warehouse.
Overall revenue in its retail division was up 2% at £2.14bn, with operating profits increasing to £291m from £245m the year before.
Its wholesale division, which sells network access to companies, is also being squeezed by new entrants. It reported an 11% drop in revenues and a 9% fall in core earnings as the impact of rival broadband providers being allowed to install their own technology into telephone exchanges rather than renting lines from BT hit home.
BT chief executive Ben Verwaayen said: "We've seen absolutely no slow- down in broadband, it's something that's essential for households. We have high expectations that momentum will continue."
He added that BT remains the UK's top retail broadband provider with 35% of the market; and said the number of customers for BT Vision, its on-demand television service offered via Freeview boxes, had more than doubled in the quarter and now sits at 150,000.
Attracting users to these new services helped BT squeeze more money out of its customers. The 12-month rolling average revenue per household increased by £2 in the quarter to £273, the eighth consecutive quarter of growth. Increased use of broadband and other services helped to offset lower call revenues.
Its net profit for the period also fell to £461m from £465m due to restructuring costs.
One positive for BT is that the lacklustre price of its shares, which were trading at well over 300p in the summer, means that some investors might see it as a bargain purchase.
Analysts believe that its dividend yield of more than 6% could stop it from falling much further and could even provide a reason to buy it as a defensive play in choppy markets.
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