BT profits from asset sales

February 7, 2002 Posted: 1346 GMT

LONDON (CNN) -- BT Group, the UK's second-largest phone company, said third-quarter profit rose 39 percent as it sold of assets to reduce its heavy debt load.

The company said net income totaled £721 million ($1 billion), or 8.4 pence per share, in the three months ended December 31. This compares to £517 million, or 7p a share, in the same period a year ago.

BT, which posted losses in the previous quarter, has been drastically transforming itself over the past year in order to cut its huge debt pile. It sold assets, scrapped its Concert joint venture with AT&T of the U.S., demerged its mobile phone business mmO2 and raised billions of pounds to trim debt.

Net debt was cut to £13.6 billion in the third quarter, down £2.9 billion from the previous quarter.

Its struggle to cut debt, that ballooned to £27.9 billion at the end of March last year, cost three top executive their jobs and crippled its standing among investors and battered its stock.

BT's chief executive Ben Varwaayen, who began in the post last week, is expected to announce the new company's new corporate strategy in about two months.

In December, the company announced plans to shed 13,000 jobs at its retail division. The jobs are to be cut over a three-year period and is expected to save the company about £850 million ($1.2 billion).

The company said sales rose 6.5 percent to £4.6 billion in the third quarter. It earned £900 million from the sale of properties, while it lost 165 million on the sales of investments.