BT Group soars on better results

LONDON, England (CNN) -- BT Group, Britain's dominant phone company, said on Thursday its fourth-quarter loss narrowed after the company disposed of its mobile phone business.

The company made a loss of £2.6 billion in the three months to March 31, compared with £2.95 billion a year ago. At the pretax level, the company made a profit of £1.27 billion, slightly ahead of analysts' expectations.

Analysts polled by Reuters had expected pretax profits in the range of £900 million to £1.25 billion.

BT, which was forced to sell its mobile phone business and overseas assets to slash a ballooning debt mountain, said debt had been reduced to £13.7 billion from £27.9 billion, below its target range of £15 billion to £20 billion.

New Chief Executive Ben Verwaayen has started focusing on boosting revenue from the company's traditional fixed-line business and Internet services.

"There is a phenomenal demand in the market that we have to fulfill and I'm absolutely convinced like many many others that what we are going to see here is the next revolution in how people use communications and there it is right in the heart of what BT is doing," Verwaayen told CNN.

Verwaayen said that last year had been a "painful experience" and the company would like debt to fall to about or below £10 billion.

BT, like its rivals Deutsche Telekom and France Telecom, had come under intense pressure to slash it debt after spending billions on new mobile phone licences and acquisition at the height of the telecom boom.

BT's (BT-) stock rose 5 percent to 265 pence after the stronger-than-expected performance.

"The strong results demonstrate that BT's strategic focus is already beginning to pay off,'' Laura Mills, analyst at investment bank Merrill Lynch, which rates the stock a 'buy', told Reuters. "The announcement of the dividend policy removes the last major area of uncertainty.''

But one area of concern is its loss-making continental European operations, BT Ignite, which made an operating loss of £353 million.

Verwaayen said that side of the business will now focus on the more profitable corporate clients and he has pledged to significantly improve BT Ignite's performance by March of next year.

BT said it had cut 2,400 jobs at the division during the year to 16,400 at end-March.

BT Group has connected 170,000 broadband subscribers by end-March through its BT Wholesale unit. Verwaayen wants to increase that to one million by next summer and five million by 2006.

High-speed, or always-on, Internet access through phone lines is at the heart of BT's plans for growth.