"New wave" technology is helping BT transform itself

Pre-tax profits for the April to June period were �416m ($761m) down from �497m in the same period last year.

A decline in demand for fixed-line services was behind the profit dip.

But BT saw demand for its high-speed technology services rise by 32% and this part of its business now accounts for 20% of revenues.

Quarterly revenues for broadband internet services doubled to �186m, with 2.7 million customers taking up BT's packages.

Rivals bite

Regulatory intervention, competition and price cuts have eaten into its traditional fixed-line business, BT said.

BT, which once had a dominant 70% share of the fixed-line market, now faces stiff competition from rivals such as Carphone Warehouse, OneTel and Sweden's Tele2.

These companies have snatched a chunk of the market from BT though enticing promotions offering free local calls or cheaper international rates.

Meanwhile, regulator Ofcom is breathing down BT's neck as it considers a break-up of the company as part of a strategic review of the telecoms industry.

Coming 'Together'

The next quarter's figures will show whether BT's strategy of adopting a simpler pricing structure have paid off.

Its 'Together' packages were designed to fend off rivals, and, so far, a total of 119,000 customers signed up for BT Together in the last quarter.

The group is hoping for further customer interest after cutting line rental and call charges on 1 July.

Fewer customers defected during its first quarter compared with the preceding three-month period, BT reported.

The former monopoly lost around 100,000 customers in the April-June quarter, compared with more than 200,000 defections in the previous quarter, said chief executive Ben Verwaayen.