BT Global Services shows signs of recovery

Services arm sees EBITDA grow 20 per cent, despite revenue decline

BT's radical overhaul of its Global Services has started to take effect, with the business' losses shrinking and EBITDA growing.

The wider BT business reported a sales decline of one per cent to £17.6bn for the nine months ending 31 December. Profit after tax rose 26 per cent to £1.6bn.

The Global Services business saw revenue decline six per cent to £3.5bn, while EBITDA was up 20 per cent to £295m.

Declines in BT's Global Services, Enterprise and Openreach arms were offset by growth in its consumer business, which rose three per cent to £8.1bn.

Outgoing CEO Gavin Patterson said: "We have continued to deliver consistently against our strategic objectives in a tough market, resulting in another sound quarter of operational and financial performance.

"Our overall outlook for the full year remains unchanged, with EBITDA around the top end of our guidance for FY 2018/19.

"We continue to expect regulation, market dynamics, cost inflation and legacy product declines to impact in the short term before being more than offset by improved trading and cost transformation by our 2020/21 financial year.

"I am handing over the business with good momentum behind its ongoing transformation programme and wish my colleagues all the best for the future."

BT said that the revenue decline in Global Services was a result of the huge cuts announced last year.

In May the telco announced plans to "significantly" cut expenditure in its consultancy arm, with 13,000 jobs being cut as part of its strategic review.

BT added that the cuts had little impact on its most recent quarter, but will likely contribute to an upturn over the next few months.

It also said that the EBITDA increase was the result of a shift away from low-margin business.

However, it revealed that order intake was down on a rolling 12-month basis, with customers demanding shorter contract lengths and more usage-based deals.