Two of Europe’s biggest telecommunications company revealed today that their revenues are still in decline, suggesting that the recent upturn enjoyed by many US IT companies has yet to arrive on this side of the Atlantic.
However, both BT and Alcatel-Lucent did manage to push profit up in their most recent financial quarters.
BT, the UK’s largest telco, saw sales fall 4% to £5.2 billion for the financial quarter ending 31 December 2009. For once, it was not BT’s troubled IT services division that experience the steepest decline, although Global Services did see a 3% quarterly sales drop to £2.11 billion. The retail division saw a bigger drop – down 5% to $2.06 billion.
BT’s profit before tax jumped 158% year-on-year to £466 million. This was driven by a 10% drop in operating cost, “primarily due to reductions in total labour costs and the delivery of other cost savings by all lines of business”. In May 2009, BT announced a plan to cut 15,000 contracting jobs in the following 12 months.
That good news for BT’s investors was counteracted by the revelation that the UK’s Pensions Regulator has “substantial concerns” about a plan by the company to compensate for the £9 billion deficit in its pension scheme. The nature of those concerns is as yet unknown.
Meanwhile, French-owned telecommunications equipment manufacturer Alcatel-Lucent, whose financial performance has been underwhelming since its creation by merger, reported a 20% revenue drop for the quarter ending 31 Dec 2009, down to €3.97 billion (£3.5 billion).
“Our fourth quarter was not as strong as expected,” said CEO Ben Verwaayen (former CEO of BT).
The company’s profitability was much improved – its net income of €46 million compares to a €3.9 billion loss in the year-ago quarter. But for the full year, Alcatel Lucent made a €524 million loss.
Some indication that the Alcatel-Lucent’s fortunes may be about change came earlier this week when US telco AT&T selected the company to supply LTE (a next generation mobile broadband technology) equipment. The next round of mobile infrastructure upgrades are set to be a money spinner for industry; yesterday Cisco revealed research that claims demand for data services is putting considerable strain on existing mobile networks.
In other telecommunications news, business Internet service provider ntl Telewest was last night rebranded as Virgin Media Business.