BT reveals plans to pay down £7bn pension deficit, upgrade fibre network

Telecoms giant BT reported a solid rise in profits in its third quarter, as it announced a new 16-year "recovery plan" to pay down its expanding pension deficit. The company also revealed that it would upgrade its fibre broadband network with large-scale pilots this summer of ultrafast broadband with G.fast. "We now think we can deploy this technology at scale which will enable us to deliver ultrafast speeds of up to 500Mbps to most of the UK within a decade," said chief executive Gavin Patterson.Adjusted pre-tax profit in the three months to 31 December 2014 totalled £814m, up 13% on the year before, despite revenues falling by 3% to £4.48bn.Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) improved by 2% to £1.57bn, ahead of the £1.56bn expected by analysts.The bottom line was bolstered by a surge in profits from the division which includes its TV, broadband and BT Sport customers. BT Consumer EBITDA jumped 43% to £251m.This, along with a 4% increase in profits at BT Business, helped to outweigh falling earnings in BT Global Services, BT Wholesale and its infrastructure unit Openreach.Patterson said the company delivered its "best-ever quarter" for fibre broadband net additions, with its network now covering three-quarters of the UK. He said: "All the major communications providers are responding to the strong market demand for fibre broadband, helping to drive take-up in what is already a very competitive market."Meanwhile, BT said its funding deficit for its pension scheme had ballooned to £7bn by 30 June 2014, compared with the previous valuation of just £3.9bn in 2011. The increase "reflect[ed] the low interest rate environment at the valuation date", BT said.The company announced plans to pay back £2bn over the next three years, and will subsequently make regular payments through to 2030."This agreement is a good outcome for the scheme's 300,000 members and BT," said finance director Tony Chfanmugam.