BT Talking To UK Govt About Spending Cuts; Confirms Outlook

29th Jul 2010 07:28

By Lilly Vitorovich Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Telecommunications firm BT Group PLC (BT.A.LN) said Thursday it is in discussions with the U.K. government over plans to slash public spending, as it reiterated its full-year outlook. BT, whose exposure to U.K. government spending cuts has got investors jittery, said it is "actively engaged with the U.K. government" about spending cuts which represent both opportunities and challenges. Chief Executive Ian Livingston said the company has made an "acceptable start" to the new financial year, delivering improved financial results while investing in the future. "Despite the challenging environment, these financial results underpin our outlook for the full year," said Livingston. Stripping out redundancy costs, earnings before interest, tax, depreciation and amortization--one of the main figures U.K. telecom analysts track--rose 6% to GBP1.4 billion in the first quarter ended June 30, beating market expectations of GBP1.37 billion. That compares with a 16% rise in the fourth quarter because of operational improvements and cost cutting. First-quarter revenue fell 4% to GBP5.01 billion from GBP5.24 billion, ahead of expectations of GBP4.95 billion. That compares with a 2% fall in fourth-quarter revenue to GBP5.36 billion. In May, BT forecast annual revenue of about GBP20 billion, underlying operating cost savings of around GBP900 million and debt of less than GBP9 billion. BT said it expects free cash flow to be around GBP1.8 billion in fiscal 2011. BT shares closed at 140 pence Wednesday, valuing the company at GBP10.84 billion. -By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290; [email protected] (END) Dow Jones Newswires July 29, 2010 02:28 ET (06:28 GMT)