British incumbent BT has reported a 26 per cent rise in half-year pre-tax profits to £1.24bn but has lost marketshare in its broadband business.

Reporting its results for the six months to September 30, BT said its overall revenues increased 3 per cent to £9.8bn. The firm reported that revenues in its broadband and IT services division rose 20 per cent and now make up around 35 per cent of the company’s business overall.

However, the company has felt the effect of a market which has seen the entry of some of the UK’s strongest brands competing in the so-called `Free Broadband’ market. BT said its broadband marketshare was 25 per cent in the second quarter compared to 30 per cent in the first quarter.

Sir Christopher Bland, BT’s chairman said the firm’s results showed “sustained momentum across the group”.

Ovum analyst Mike Cansfield said BT’s revenue growth was “modest” and that “The real story here is the transformation that is to take place in BT.” He added: “Later this month two things are to happen that will signify how BT is moving from the old world to the new, from planning to implementation, from a product to a services business.

“Firstly, BT switches on its next-generation network (21CN) in South Wales. This is the start of a process that will complete in 2011 that will greatly simplify its network and systems operating structure and enable it to both speed-up and automate service delivery.

“Secondly, BT is to launch its IPTV offer to consumers in the autumn. With 3 million retail broadband customers of its own it has a reasonable customer base it can target. More importantly it now has over 250,000 of the home hubs required to take the service in-place to provide the in-home platform for the service. The importance of this is that the home hub is the basis not just for IPTV but also BT’s fixed-mobile voice convergence service (Fusion), and can connect to laptops and game consoles wirelessly. These new services are seen as the great hope for growing new revenues in the consumer space.”