November 08, 2001, 10:07 AM — British Telecommunications PLC (BT) on Thursday reported heavy losses for its second quarter, due in large part to the exceptional items incurred by disbanding Concert Communications Co., its joint venture telecommunication carrier with AT&T Corp.
BT reported an after-tax loss of 1.48 billion pounds (US$2.18 billion, as of Sept. 30, the last day of the quarter being reported), a stark contrast to its profit of 280 million pounds in the same quarter last year, BT said in a statement.
The massive losses include BT's write down of 1.2 billion pounds of investment in Concert and AT&T Canada, BT said. BT and AT&T announced on Oct. 16 that due to continued losses from over capacity and a sharp drop in telecommunication prices, the multinational company would be shut down and its assets returned to the parent companies.
BT's share of Concert's loss in the second quarter was 40 million pounds, compared to a profit of 46 million pounds in the same quarter last year, BT said. The company also laid blame on weak sales by its global distributors and its wholesale operations.
Earnings for BT, stripping out exceptionals, interest, tax, depreciation and amortization, were 1.46 billion pounds in the second quarter, down 7 percent from 1.57 billion pounds in the second quarter of last year, the company said.
The company's debt, which at one point earlier this year reached nearly 30 billion pounds, stood at 16.5 billion pounds by the end of the second quarter, BT said. The reduction in debt was due to its rights issue, which closed in June and raised 5.9 billion pounds, as well as the sale of assets. BT's Japanese assets sold for 3.7 billion pounds and 2 billion pounds were raised from the sale of its former Yell directories business, BT said.
BT forecasted a debt of between 15 billion and 17 billion pounds by March 31, 2002.
BT also announced that its finance director, Philip Hampton, will leave the company next year. Hampton's contract had been until November 2002 and an announcement about his departure had not been expected.
Hampton's announcement comes just over a week after BT confirmed that its Chief Executive Officer (CEO) Sir Peter Bonfield will step down in January 2002, a year ahead of schedule.
Hampton had been considered one of the candidates for BT's top job, but instead has decided to depart BT after it completes the spin off of its wireless division MMO2 PLC as a separate, publicly traded company on Nov. 19, BT said.
In the second quarter, MMO2 lost 94 million pounds on an operating basis, compared with a loss of 127 million pounds by the wireless division in the same quarter of last year, BT said. About 11 percent of the wireless division's income is derived from data traffic, BT said.