A little like oom really from my point of view - I believe they are the favoured company within their sector and despite the markets - Oftel and the G3 nonsense they will climb back. They pay a divi and this wioll be seen to be increasingly important in the days to come. They have new management and are looking to enhance shareholder value .....

I hold and swing trade a few and not adverse to intraday trading them.

ains


BT in web-based investor relations drive

London, February 7 2003, (netimperative)



by Chris Lake

BT is launching a web-based scheme which it hopes will improve communications with its retail shareholders and help cut costs.


Dubbed 'ShareholderPlus', the system allows investors to sign up and receive BT communications - such as reports, news releases, mandates and, subject to a change in the law, electronic tax vouchers - by email, rather than by post.

BT said this will help it achieve cost savings - by not having to print and despatch reports - and pointed out that it is also good for the environment.

Furthermore, it has negotiated a number of deals with companies such as Virgin Wines, Apollo Travel, RSA and National Car Rental, to market the service and said it will add new offers in the future if it proves to be a success.

BT claims to be one of the first FTSE100 companies to launch such a programme, though it is likely that more will follow.

www.btplc.com/shareholderplus

Must admit I think wireless is the way of the future ..... allows the freedom to roam whilst staying in touch


BT to put wireless net links in 1,000 pubs
By Mary Fagan (Filed: 18/05/2003) S. Telegraph


BT has forged an agreement to install local wireless broadband networks in more than 1,000 pubs across the UK. The networks, known as WiFi, allow customers to use their laptops to link wire-free into the national broadband backbone.

The plan is part of a drive by BT to accelerate broadband take-up. It will be announced tomorrow along with a separate deal to introduce very low-cost equipment, costing 400, which will transform any venue with a broadband link into a WiFi "hotspot".

BT will share the revenues with the owners of the hotspot premises, which could include cafes and restaurants, golf courses and hotels.

The pubs initiative will be launched in co-operation with Leisure Link, which installs digital gaming equipment. The outlets are likely to include branches of All Bar One and pubs owned by Mitchells and Butlers and Enterprise Inns.

BT has said it will have 4,000 WiFi hotspots around the country by summer 2005. However, Pierre Danon, the chief executive of BT Retail, will say this week that he will reach that target a year early.

"We want to keep BT's innovation ahead of the competition. The challenge is to make WiFi hot spots ubiquitous across the UK," he said.

In a bid to boost demand, Danon will also reveal that anyone buying a new BT wireless broadband modem will receive two free hours of WiFi hotspot usage every month for a period of six months. The charge per hour is normally 6.

BT pension move could save 30m
18 May 2003, Mail on Sunday

ELECOMS giant BT Group is planning a major charm offensive this week to persuade credit agency Moody's to improve its rating, which would save it a fortune in interest payments.



The company hopes to use an actuary*'s report on the state of its massive pension fund to bolster its claim for an upgrade.


If it succeeds, it could save more than 30 million a year. This is because interest rates on much of BT's borrowings depend on its credit rating. Banks demand more money from companies thought to be at a higher risk of failing to repay loans.


BT chief executive Ben Verwaayen is expected to announce profits of about 5.7 billion before interest, tax and depreciation, but the City's focus will be on the state of the pension fund, Britain's biggest.


The company must announce the FRS-17 standard valuation of the fund measured on March 31. This 'snapshot' of the size of the fund is expected to show a massive deficit as high as 12.5 billion. BT is paying hundreds of millions a year - including 600 million last year - to make good the shortfall.


But the group will also unveil a long-term review of its pension fund. When it was last measured in 1999, it was realised that it would have to be boosted because retired workers are living longer and collecting their pensions for longer.


This time, there will be a sizeable drop in the fund value because of the collapse in global stock markets since 1999, but the actuary's report is expected to argue that such swings tend to even out over the long term.


BT is hoping this argument will help convince Moody's that it is due for a credit upgrade. One analyst commented: 'BT is hoping to distract analyst and credit ratings agencies away from FRS-17 towards the actuarial review.


'The actuarial deficit is likely to be about 2 billion before tax compared with more than 12 billion by FRS- 17. Bad enough, but with BT's debt down and cash flowing in, Moody's might be persuaded to fall into line with the other agencies in relatively short order.'


Pension fund managers* and trustees have yet to see the review, which has been going on since the start of the year, and BT will be hoping this week that they can be reassured.


'There is going to be a major effort to put pensioners and employees' minds at ease over the scheme,' said a source close to the fund. 'Whenever they see these huge deficit figures, they fear that the fund may collapse. That just isn't the case.'


2003 Associated Newspapers Ltd.

I went short of these @ 195.75 on Friday.....

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I expect you use BT a lot in your search for guttesnipes

LOL!!!!!!!!!'


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Covered short @ 184.5

of course you did lol .... I don't think anyone will believe a trade taken out on Friday morning at the high but reported on Sunday afternoon long after we have all read the papers and seen the news plus the shares were already down lots at close .... roflol


ains

LONDON (Reuters) - BT Group says it has accelerated the roll-out of its WiFi network, seeking to capitalise on a new wireless Internet technology aimed at deep-pocketed corporate clients.
BT BT.L said it has launched a self-install product, developed with Japanese retail equipment maker Toshiba 6588.T , that would make it easier for pubs, shops and small hotels to become WiFi "hotspots" where travelling executives can access the Net.

"We are now committing to deliver 4,000 hotspots by summer 2004, rather than 2005," BT Retail Chief Executive Pierre Danon said in a statement.

WiFi installations allow users of specially equipped laptops and handheld devices to get wireless Internet access at short ranges.

European telecommunications companies, including France Telecom FTE.PA and Swisscom SCMZn.VX , have been agressively rolling out "hotspots" in airports, hotels and coffee shops.

BT started rolling out its Openzone WiFi network last year, and offers unlimited access subscriptions for 85 pounds per month or 300 minutes for 20 pounds per month.

BT announced on Monday the launch of a cheaper product, offering 120 minutes of access for 10 pounds per month.

Usage of the Openzone network had grown by 20 percent per week for the past two months, with users now on it for an average of more than 90,000 minutes per week, BT said.

BT has signed a deal with The Cloud, a WiFi network developed with Leisure Link Group, Britain's largest operator of slot-machines and jukeboxes in pubs. As a result, it aims to have 1,300 WiFi hotspots by the end of 2003.

Aimed largely at the corporate market, BT Openzone now has 50 major British companies as customers.

Monday 19th May 2003
Graeme Wearden


BT's wireless bundle, together with a new 'hot spot in a box', is an attempt to boost its Openzone Wi-Fi hotspot service, which has seen lacklustre usage
Customers will be able to buy a broadband connection for their home, a wireless modem, and a subscription to BT Openzone's Wi-Fi network all in one package from this autumn.

BT announced on Monday that it will begin selling the bundled offering from September. Pricing details are not yet available, but BT has said that it will cost "a single, affordable monthly fee".

The bundle is likely to appeal to mobile professionals who want the ability to use a laptop computer around their home, and who would also value the chance to surf the Web and send and receive emails in public places such as airports, hotels and coffee shops.

BT Broadband provides an ADSL connection of 512Kbps, and costs up to 28 per month on its own. The Voyager ADSL 802.11b wireless modem is also included in the bundle.

Separately, BT also announced that it is launching a Wi-Fi "hot spot in a box", aimed at small businesses such as hotels and book shops. The product includes an 802.11b access point from Toshiba, and BT will provide the network connectivity.

Sluggish take-up?
BT Openzone was launched last summer, after the government legalised commercial Wi-Fi networks. At its last official announcement, BT had around 110 hot spots, but the company insists that more have since been launched and that its target of 400 by this summer is still achievable.

Usage of the network is growing rapidly, according to BT, which said that it has now reached over 90,000 minutes of access per week.

That only works out at 1,500 hours usage per week, or around two hours per day per hot spot.

"We're still in the rollout stage," insisted the BT spokesman, pointing out that customers will be much more attracted to Wi-Fi once operators have built larger networks. "When that happens, we'll have really made Wi-Fi a useful service for people to use," he added.

One reason for slow take-up could be pricing. BT has been criticised for charging 85 per month for unlimited access to Openzone, and on Monday it also announced a new tariff. Openzone 120 gives 2 hours access per month for 10 per month -- slightly better value than the existing fee of 6 for one hour's one-off access.

BT 'ahead of schedule' madness

London, May 20 2003, (netimperative)



by Susie Harwood

BT Retail has announced that it expects to reach its target of delivering 4,000 wireless hotspots a year early, as a result of several new initiatives aimed at accelerating the roll-out of its Wi-Fi network.


The company, which unveiled its Openzones wireless network programme last June, said it remains on target to have 400 hotspots in place this summer, and expects to deliver 4,000 hotspots by summer 2004, ahead of its initial target of 2005.

One of the new initiatives includes a partnership with Toshiba to develop a new off-the-shelf product called 'hotspot in a box', which combines Wi-Fi networking gear with ADSL subscriptions. The companies are targeting small businesses such as hotels, bookshops and golf clubs that want to provide wireless broadband access to their customers.

Under the deal, Toshiba will manufacture the hotpsot technology and BT will be the wireless ISP. BT Retail claims that the new product will cost a fraction of the usual price for a WLAN hotspot.

In addition, BT said it has signed other partnership deals with Cisco, Nortel and Carphone Warehouse. BT and Cisco are working on 'guest hotspots' for use in office buildings to allow companies to offer wireless access to their visiting customers.

To encourage more businesses to install Wi-Fi networks, BT has teamed with Cisco and Nortel to offer a two-month 'try before you buy' promotion. Companies signing up for the offer will get a trial Wi-Fi network, laptop cards and a number of BT Openzone accounts and free vouchers.

Meanwhile, Carphone Warehouse is to offer a deal that gives six months free Openzone 120 access, worth 60, to anyone who buys BT's Voyager ADSL wireless modem for the home. It has also launched a new cheaper product, offering 120 minutes of access for just 10 a month.

The telco said the local hotspots created using the product from BT and Toshiba will be in addition to the BT Openzone access points that will be available in 1,300 pubs and clubs by the end of the year, as a result of a deal with Wi-Fi network The Cloud.

The Cloud, an initiative developed by Leisure Link Group, Britain's largest operator of slot-machines and juke boxes in pubs, is expected to announce the official launch of the service later this week, initially in about 1,000 pubs, cafes and restaurants.

Boost to wireless broadband BBC NEWS


Hotel lobbies could become popular venues for the wireless web
BT is speeding up plans for thousands more places around the UK where you can go online via a wireless broadband connection.
To further that aim, the telecoms giant is offering wireless starter kits, dubbed hotspots in a box, which will allow companies to set up their own wi-fi networks.

It follows the success of self-install home broadband access, which was a major contributor to kick-starting a fast net boom.

People will need a fixed broadband line from BT, but for 400 can buy the equipment necessary to provide wireless broadband as well.

But unlike the self-install fixed broadband, people will still need a BT engineer to set up the hotspot.

Battle for the airwaves

It has been confirmed that wi-fi is at least five times faster and 10 times cheaper than 3G

Pierre Danon, BT Retail

The telecoms firm envisages such services being offered in all kinds of public spaces including hotels, restaurants, golf clubs, airports and stations.

It already has partnerships with firms such as Hilton Hotels and the owners of the Costa chain of coffee shops.

The telecoms firm is keen to avoid the criticism about its slowness to provide fixed broadband services and promises to have 4,000 hotspots across the UK by the summer of 2004, a full year earlier than it has previously said.

The decision is partly a result of the popularity of such hotspots which, according to BT, have seen a 20% surge in usage in the last two months.

Mobile firms on the brink of rolling out 3G services may worry as BT puts wi-fi head to head with third generation services.

"It has been confirmed that wi-fi is at least five times faster and 10 times cheaper than 3G," said Pierre Danon, head of BT Retail.

And he believes that the technology already has the edge with e-mail as people would rather send messages via wi-fi than 3G.

"You don't do e-mail while driving or walking. 3G is about data on the move but this is about data on the stop," he said.

European boom

Most business models are not proven yet and some location owners might even consider offering the wireless service for free to attract customers

Evelien Wiggers, IDC analyst

Despite this, Mr Danon does not rule out the possibility of so-called roaming agreements with 3G firms in the future, which would offer people the chance to swap between wi-fi and 3G networks.

According to research firm IDC, wireless hotspots are set to expand rapidly across Europe.

It predicts there will be around 32,500 hotspots in place by 2007.

Whether the technology can offer profits for petrol stations, airports, cafes and other open spaces remains to be seen but it could be good news for consumers.

"Most business models are not proven yet and some location owners might even consider offering the wireless service for free to attract customers," said IDC analyst Evelien Wiggers.

Wi-fi has to date remained largely the preserve of business people on the move.

But BT believes it can be a useful addition to the home and anyone paying out 249 for a wireless modem will get six months of access to public hotspots thrown in for free.

No state handouts for broadband BBC NEWSS


60% of houses have internet connections
The government has no plans to subsidise broadband services to ensure they are available in remote areas of the UK, E-commerce Minister Stephen Timms has insisted.
Encouraging competition between service providers was a better way than providing hand-outs for getting rural communities online.

Mr Timms admitted that more than a quarter of households across the UK were not within reach of an affordable broadband service, with rural areas being the worst off.

The whole problem with the government's approach is that it has been essential for it to be demand led when infact nearly all these technologies rely on being supply driven

Bill Wiggin
Mr Timms and Rural Affairs Minister Alun Michael were defending the government's position during questioning by the House of Commons environment select committee.

Members were concerned why broadband was taking so long to reach remote areas of the UK, despite the government's target of having "the most competitive and extensive broadband network in the world".

'Misleading'

Tory MP Bill Wiggin said while the ministers were "celebrating two million users connected to broadband", they were "really missing the point" that there was a "fundamental problem" with the take up of broadband.

"Something like 60% of houses in the UK already use the internet," he said.

"We are not talking about technology people don't understand and it's quite important not to mislead the public.

"The whole problem with the government's approach is that it has been essential for it to be demand led when infact nearly all these technologies rely on being supply driven and that is why there is a fundamental problem with take up of broadband."

Mr Timms acknowledged that "over a quarter of households in the country are not within reach of an affordable broadband service today".

Mobile phones

But he stressed: "That is about the same proportion as in the US. We need to recognise that this is not by any means a UK issue. It's an issue that is being faced particularly in rural areas right around the country.

"I think if you look at the history of the development of telecommunications, what you find is that the best approach is a market led approach and that where you have had attempts made to provide large government subsidies to encourage the roll-out of new technologies, that by and large has not been very successful.

"There is a short term gain, but you end up with technology that actually people don't want and, as the technology moves on... there is a market distortion introduced by large amounts of public subsidy proves to be a disadvantage in the long term."

Mr Timms said competition had been seen as a more effective tool in extending the use of mobile phone services to rural communities than any intervention by the state.

But Labour's David Borrow said the committee's impression was that the expansion of broadband was "largely market led" and this was not going to deliver access to it quickly.

BT

Tory member David Curry also urged the ministers to state whether it was "the government's aim that every community in the UK irrespective of location should be able to access broadband at affordable rates within a reasonable time".

Mr Michael admitted that there were clearly places where connection by cable or through an exchange was "not possible" but where other technologies could be the answer.

In November, the prime minister announced government spending of 1bn on broadband to improve public services, with a broadband connection in every school by 2006.

Meanwhile, BT is speeding up plans for thousands more places around the UK where you can go online via a wireless broadband connection.

To further that aim, the telecoms giant is offering wireless starter kits, dubbed hotspots in a box, which will allow companies to set up their own wi-fi networks.

LONDON (AFX) - BT Group PLC, the UK's dominant residential phone company, reported a 44 pct jump in full year profits and hiked its dividend.

For the year to March 31 2003 profit before tax, goodwill amortisation and exceptional items was 1.829 bln stg, up 44 pct up on the prior year.

Group turnover of 18.727 bln stg, rose 2 pct.

According to an AFX poll of six broker forecasts BT was seen reporting profits of 1.74-1.84 bln stg.

"We are well ahead of schedule in meeting 13 out of the 14 stretching targets set at the beginning of the year," said chief executive Ben Verwaayen.

"In particular, the three year cash and net debt targets have been met in the first year, strengthening our financial position," he added.

For the last three months of the year underlying profit before taxation of 490 mln stg was up 32 pct. The figure was ahead of broker forecasts centred on 460 mln stg. Net debt fell by 3.3 bln stg to 9.6 bln. The full year dividend was hiked to 6.5 pence per share, from 2 pence. But group turnover in the final quarter increased year on year by a meagre 1 pct to 4.778 bln stg, whereas analysts had hoped for a 1.2 pct rise.

The upturn in the final quarter reflects a lower interest charge, with debt falling from 13.7 bln stg at the end of 2002 to 9.6 bln stg.

The group saved 271 mln stg in interest payments at the full year.

For the year as a whole, BT also saw a positive contribution of 181 mln stg from its associate companies, mainly France's Cegetel.

In the final quarter of last year BT's associates recorded a loss of 108 mln stg, reflecting the loss-making and now defunct Concert joint venture.

The company also made a net profit of 1.216 bln stg from the sale of its stake in France's Cegetel to Vivendi in January.

On pensions BT said its triennial funding valuation showed a deficit on the scheme of 2.1 bln stg at Dec 31 2002, up from 1 bln stg on Dec 31 1999.

As a result the annual deficiency payments will be increased by 32 mln stg to 232 mln from Dec 2003, said BT.

The group's actuaries, using accounting standard SSAP 24, showed a deficit of 1.4 bln stg at March 31 2003. As expected, this will result in an increase in the pension charge of around 120 mln stg in the year 2003/04, said BT. tf/slm/

The market likes the news and BT heads the top 100 risers board :-))

BT boosted by pension relief

By Braden Reddall, UK telecoms correspondent
LONDON (Reuters) - BT Group has delivered strong full-year profits and a better-than-expected dividend, while also putting some fears to rest about its massive pension fund deficit.

Shares in BT BT.L , which have recently been recovering from a massive sell-off due to concerns about its pension funding, rose more than four percent to 193 pence in early London trade.

Under the new FRS17 accounting standards, BT reported a 6.3 billion pound gap in its pension fund, one of the largest in Britain that has been hammered by three years of declining equity markets.

The company pleased investors with a 4.25 pence final dividend per share, raising the total payout to 6.5 pence from 2.0 pence last year.

"Our analysts like the payout ratio on the dividend which is going up and the contributions into the pension are a lot less than expected, so there will be less of a drain on earnings growth going forward," one trader said.

Underlying pre-tax profit rose 44 percent to 1.829 billion pounds in the year to the end of March, compared with a Reuters poll of 10 analysts' forecasts running from 1.784 billion to 1.835 billion pounds. Underlying earnings per share also hit the top end of forecasts at 14.2 pence per share.

Revenue rose two percent to 18.727 billion pounds, in line with forecasts.

MORE NET SUBSCRIBERS

BT is also on the brink of meeting its mid-2003 target for one million high-speed Internet connections. As of May 16, BT had 936,000 broadband subscribers on its network through its own and other Internet service providers.

Net debt dropped to 9.6 billion pounds, from 13.7 billion one year before.

BT's 6.3 billion pound FRS17 pension deficit, which was net of tax, was lower than some analysts had expected. Indicating the volatility of the measure, BT said the FRS17 position as of May 16 showed a reduced deficit of 5.7 billion pounds.

Coming off their early highs but still way ahead and will bounce again



Nick Goodway, Evening Standard
22 May 2003

BT today revealed one of the largest holes in a British pension fund, but the 2.1bn deficit - equivalent to 5,737 for each of the 366,000 members - was less than many commentators feared.



It means BT will have to raise its extra cash payment into the fund from 200m a year to 232m and lift the percentage it pays in regularly from 11.6% to 12.2%.



However, under the proposed new acounting rule FRS17, BT's pension deficit ballooned from 1.28bn to 6.3bn as share prices and other investments crashed last year. But since the March year-end, the deficit under FRS17 has come back to 5.7bn.






In a year which saw a strong recovery at BT, particularly with the slashing of net debt from 13.7bn to 9.6bn, chief executive Ben Verwaayen said: 'Our strong financial performance demonstrates our ongoing ability to reduce debt, reward shareholders and invest for the future.'



BT said it would speed up its plan to pay half its earnings to shareholders in dividends. Last year's full dividend is raised from 2p to 6.5p, paid out of earnings up 61% at 14.2p.



Pre-tax profits before goodwill amortisation and exceptionals rose 44% to 1.83bn on turnover just 2% better at 18.7bn. Verwaayen said that, with 936,000 broadband subscribers, the group would easily hit its target of one million users by the summer.



He said the service was well ahead of schedule, having met 13 of the 14 specific targets he had set at the beginning of the year.


BT's pension funds have 92,000 active members, 96,000 deferred members and 178,000 people already drawing a pension.

bbc news


UK broadband hits two million


The spread of broadband has been helped by lower prices
The UK has totted up two million broadband connections, according to the telecoms watchdog Oftel.
The success will be seen as a sign that the UK is catching up with its European neighbours in the race to be the best place for fast net services.

With new connections running at 35,000 a week, telecoms regulator Oftel is confident the UK can reach the top of the broadband league table.

"It took two years to reach one million connections but only seven months to reach two million, as increased competition and lower prices have boosted connection rates," said David Edmonds, Director General of Telecommunications.

Digital divide

It offers new ways of boosting education and skills, as well as giving rural communities better access to government services

Alun Michael, Rural Affairs Minister

The figures, based on information from network operators, will come as a relief to the government. It has committed itself to make the UK the best place for broadband in the G7 group of countries by 2005.

"We now have the third most competitive broadband market in the G7 and we have today hit two million connections in the UK which goes to show that we are heading, full speed, in the right direction," said e-Commerce Minister Stephen Timms.

According to the Office of National Statistics, the UK has seen a 200% growth in broadband in the last year, due largely to falling prices, fierce marketing campaigns and new ways to install the technology.

Avoiding a digital divide between regions that have access to broadband and the 30% that remain reliant on dial-up connections will be the next big hurdle.

And the need to connect the remoter parts of the UK to the broadband revolution is not lost on the government.

"This technology has huge potential to overcome the barriers of physical distance leading to increased productivity for our rural businesses," acknowledged Rural Affairs Minister Alun Michael.

Action not words

The government's role is to get out there and buy it

Jim Norton, Independent Director
"It offers new ways of boosting education and skills, as well as giving rural communities better access to government services," he added.

Critics are increasingly calling on the government to replace its rhetoric about rural broadband with action.


"The government's role is to get out there and buy it rather than regulating the industry to death," said Professor Jim Norton, the former director of the Cabinet Office's e-commerce team.

Speaking at a broadband conference in London, Professor Norton said that the government had vast buying power.

"In rural areas the government is often the biggest customer. If it could buy better then it would create the critical mass needed for operators to invest," he said.

LONDON, May 22 (Reuters) - Moody's Investors Service on Thursday said a 6.3 billion pound pension deficit posted by BT Group Plc BT.L was weighing on its Baa1 credit rating, which has a positive outlook.
"The absolute size of the pension deficit under FRS17 does cause us some concern and it's definitely an overhang on the rating," Moody's telecoms credit analyst Aidan Fisher told Reuters.

BT is among European telecoms operators with improving credit quality. Rival rating agency Standard & Poor's last month also said BT's pension deficit was constraining its credit ratings.

By Braden Reddall, UK telecoms correspondent

LONDON, May 22 (Reuters) - Britain's dominant telecoms group BT Group Plc delivered strong full-year profits and a better-than-expected dividend on Thursday, while also putting some fears to rest about its huge pension fund deficit.

Shares, which have recovered recently from a massive sell-off amid concerns about BT's pension fund, rose up to six percent. By 0830 GMT, they were 1.1 percent up at 187 pence.

Investors welcomed the profits and dividend, though bearish analysts still wonder how much top line growth the former monopoly can generate in an increasingly competitive market.

Under Britain's FRS17 accounting standards yet to be used in practice, BT reported an end-March 6.3 billion pound ($10.4 billion) shortfall in one of the UK's largest pension funds, which has been hammered by three years of declining stocks.

But under the less stringent Funding Valuation measure, BT reported a pension scheme deficit of 2.1 billion pounds as of December 31. As a result, its annual cash contribution to top up the fund will rise by only 32 million pounds to 232 million.

BT Chief Executive Ben Verwaayen said the valuation should be welcomed by the 370,000 pension fund members and BT's shareholders alike.

"The pension fund is safe. We have certainty now. What matters to our pensioners of course is what about the funding and what about the funding valuation," Verwaayen told reporters on a conference call. "It's good news for our investors because we are absolutely certain."

Underlying pre-tax profit rose 44 percent to 1.829 billion pounds in the year to the end of March, at the top end of a range of forecasts from 10 analysts polled by Reuters. Earnings per share also hit the top end of forecasts at 14.2 pence.

The company also pleased investors with a 4.25 pence final dividend per share, raising the total payout to 6.5 pence from 2.0 pence last year. "We have a very solid dividend payment this year, and we see improvements going forward," Verwaayen said.

Revenue rose two percent to 18.727 billion pounds, in line with forecasts.

Analysts praised the earnings numbers and higher dividend, and welcomed an end to speculation about the pension gap.

"Clarity on the pension funding situation should now ease one of the major concerns dogging the stock," said Nomura telecoms analyst Mark James, reiterating a "buy" recommendation.


MORE HIGH-SPEED INTERNET SUBSCRIBERS

BT is also on the brink of meeting its mid-2003 target for one million high-speed Internet connections. As of May 16, BT had 936,000 broadband subscribers on its network through its own and other Internet service providers.

Net debt dropped to 9.6 billion pounds, from 13.7 billion one year before.

BT's 6.3 billion pound FRS17 pension deficit, which was net of tax, was lower than some analysts had expected. Indicating the volatility of the measure, BT said the FRS17 position as of May 16 showed a reduced deficit of 5.7 billion pounds.

But FRS17 standards are not yet in use in accounting, and under the old SSAP 24 valuation that aims to iron out volatility the deficit was 1.4 billion pounds at the end of March. This would result in a 120 million pounds increase in the pension charge in its profit and loss account in the current year.

Finance Director Ian Livingston said: "What's important in all of this of course is the cash flow emanating from the fund, because that's the thing that pays the pension."

"Overall the money coming into the fund in the form of dividends and contributions is actually more than we paid out to the pensioners, and we expect that to be the situation for a number of years to come." (Additional reporting by William Kemble-Diaz)

SKY

UK TAKES TO BROADBAND


There are now two million broadband users in Britain, according to telecom regulator Oftel.

It said 35,000 people are signing up every week for broadband, which provides a faster service and a permanent link to the web.


Last October it was only 20,000 a month.

Oftel said lower prices and increased competition had been boosting sales.

The Government said it was stepping up its efforts to speed up the roll-out of broadband across the country.

E-commerce Minister Stephen Timms said every school would be connected by 2006.






Last Updated: 11:18 UK, Thursday May 22, 2003

Adds more quotes from conference call, fund manager, Moody's)
By Braden Reddall, UK telecoms correspondent

LONDON, May 22 (Reuters) - Britain's dominant telecoms group BT Group Plc delivered strong full-year profits and a better-than-expected dividend on Thursday, while also putting some fears to rest about its $10.4 billion pension fund deficit.

BT shares, having recovered in recent weeks from pension fund fears that led to a sell-off earlier this year, rose 3.4 percent to 191-1/2 pence, putting the stock on course for its highest close in four months.

Investors welcomed the profits and dividend, but bearish analysts wondered how much revenue growth the former monopoly can generate in an increasingly competitive market. And Moody's Investor Service saw the pension deficit as a cause for concern.

Under Britain's FRS17 accounting standards yet to be used in practice, BT reported an end-March 6.3 billion pound ($10.4 billion) shortfall in one of the UK's two largest pension funds, which has been hammered by three years of declining stocks.

But under the less stringent Funding Valuation from an independent actuary, which determines how much cash BT must pay to top up the fund, the pension deficit was 2.1 billion pounds on December 31.

As a result, BT's annual cash contribution to the fund will rise by only 32 million pounds to 232 million, far less than the 100 million pounds increase predicted by analysts.

Chief Executive Ben Verwaayen said the news would please its 370,000 pension fund members, as well as BT shareholders.

"It is very important that we have certainty. We know where we are. The numbers were all over the place," Verwaayen said, referring to wide-ranging forecasts for the pension deficit.

Underlying pre-tax profit rose 44 percent to 1.829 billion pounds in the year to end-March, at the top end of forecasts in a Reuters poll, helped by sharply lower interest payments on debt. Earnings per share also hit the top end of forecasts at 14.2 pence. Revenue rose two percent to 18.727 billion pounds.


DIVIDEND SURPRISE

BT also pleased investors by tripling the total dividend to 6.5 pence, and Verwaayen said the payout could improve further in the future. But analysts say this depends on whether Moody's improves BT's debt rating, and early signs were not good.

"The absolute size of the pension deficit under FRS17 does cause us some concern and it's definitely an overhang on the rating," Moody's telecoms credit analyst Aidan Fisher said.

But BT's 2011 bonds GB012368488= improved, with the yield tightening four points to 131 basis points over government debt.

Karen Robertson, fund manager at Standard Life Investments, praised the results but wondered about the potential impact of leading British retailers, such as Tesco TSCO.L and Carphone Warehouse CPW.L , entering the market for home phone services.

"They still make the bulk of their profits from the core business, and they're facing competitive pressures," she said.

But Verwaayen, forced to abandon ambitious revenue targets last year, sought to answer the concerns by pointing to falling cancellation numbers and emphasising BT's focus on profits.

"We are not looking for revenue growth, we are looking for profitable growth," he told reporters on a conference call.

One such "profit engine" is broadband, and BT is on the brink of hitting a mid-2003 goal of one million high-speed Internet connections. As of May 16, BT had 936,000 broadband users through its own and other Internet service providers.

BT's net debt fell to 9.6 billion pounds from 13.7 billion last year, hitting another target of sub-10 billion pound debts.

The pension deficit under FRS17, which takes a snapshot view, was lower than analysts had expected. Illustrating the volatility of the measure, BT said the FRS17 position as of May 16 showed a lower deficit of 5.7 billion pounds.

As for persistent rumours about BT buying back mobile offspring mmO2 OOM.L , Verwaayen repeated his belief in simply buying in services that can be packaged for clients.

"You don't need to own the mobile operator to be able to bundle for your customers," he said. (Additional reporting by William Kemble-Diaz and Alex Clelland)

LONDON (AFX) - Standard & Poor's Ratings Services said it has affirmed its 'A-' long-term and 'A-2' short-term corporate credit ratings on BT Group PLC, with a stable outlook.
"The continuing strong market position of BT's UK fixed-line voice and data business, supported by the group's focus on operating and capital efficiency, has enabled BT to sustain strong operating profitability and cash flow," said S&P's credit analyst Peter Kernan.

"Standard & Poor's has reviewed the assumptions that underlie BT's actuarial pensions deficit, and the way in which the scheme's funding level is being monitored and managed, and believes them to be reasonable," he said.

S&P expects BT to continue to generate free operating cash flow of more than 1.5 bln stg per year, enabling the group to comfortably fund its pension deficiency contributions and continue to reduce its reported net debt.

"BT is committed to financial discipline and we assume the group will continue to generate significant discretionary cash flow (free operating cash flow after cash dividends), which will be used to further deleverage the group's balance sheet and further strengthen its credit profile," he added.

"BT is expected to pursue a conservative and tightly controlled strategy, in particular with regard to its acquisitions and dividends policy, and maintain a strong business risk profile," Kernan said.

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