BT's fiscal Q3 revenue hurt by struggles in global services division, transit

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BT (NYSE: BT) on Friday reported that Q3 2012 revenues declined 9 percent to £4.5 billion ($6.08 billion) due to various regulatory decisions, while seeing an uptick in fiber-based broadband services and its enterprise segment.

When these items are taken out, BT's revenue declined 6 percent.

The service provider attributes the decline in revenue to a £66 million ($103.8 million) reduction in transit revenue, including mobile termination rate reductions of £37 million ($58.2 million), and its struggling Global Services business.

Ian Livingston, CEO of BT said the service provider plans to conduct more cost-cutting measures in the Global Services division this year.

Here's a breakdown of BT's key division metrics:

BT Global Services: Due to challenging conditions in both Europe and the financial services sector, Global Services revenue declined to £1.75 billion ($2.8 billion) from £1.89 billion ($2.97 billion). Despite the revenue decline, the telco reported that it had secured contracts with a number of large enterprise customers, including Novartis, Visa Europe and HTC. To fulfill future customer needs, the service provider added new points of presence in Europe and Asia.

BT Retail: Retail revenue declined 3 percent to £1.79 billion ($2.8 billion). In the retail division, consumer revenue fell due to an expected decline in traditional phone service revenues, which was partially offset by growth in broadband services, particularly its growing FTTx-based service set. During the quarter, BT added 122,000 retail broadband customers, representing 44 percent of the DSL and fiber broadband market net additions. It also added 200,000 retail fiber broadband customers and 21,000 BT Vision customers.

BT Wholesale: The wholesale group's revenues declined 3 percent to £890 million ($1.4 billion) as the growth in managed network services was offset by the ongoing impact of broadband lines migrating to Local Loop Unbundling (LLU). One bright spot was IP Exchange, where voice minutes increased by 80 percent during the quarter. BT said it expects "revenue from IP Exchange in BT Wholesale and BT Global Services to be around £100 million ($157.3 million) this year."

Openreach: BT reported that the ongoing impact of regulatory prices changes set by UK regulator Ofcom drove the decline in Openreach's revenue to £50 million ($78.7 million). However, the decline was partially offset by growth in Ethernet and fiber-based services. On the broadband side, BT said its fiber-based broadband service, which it sells to competitors such as TalkTalk (LSE: TALK.L) is available to 13 million premises, up 1.3 million in the quarter.

BT's shares were trading at $41.20, down 0.45, or 1.08 percent, on the New York Stock Exchange on Monday morning.

For more:
- see the earnings release

Special report: Wireline telecom earnings in the fourth quarter of 2012

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