Esat BT reported €4.9 million earnings before interest, tax, depreciation and amortisation (EBITDA) for the first quarter of 2002 yesterday, the first time it has generated positive earnings since it disposed of mobile phone subsidiary Digifone.

The firm is the first European subsidiary of British Telecommunications to become EBITDA positive. This was the target set recently by BT chief executive Mr Ben Verwaayen to be achieved by March 2003.

The State's second-biggest telecoms firm also confirmed it would write off about €400 million in goodwill in its first-quarter results to clean up its balance sheet. The write-offs, which were first signalled by Esat BT earlier this year, will take account of the fall in value of a number of acquisitions made by Esat including the telecoms and internet firms Ocean, Postgem and Labyrinth.

Esat BT results show it made €4.9 million EBITDA in the quarter to end-June 2002, compared with a loss of €11.1 million in the same period a year ago.

The firm generated revenues of €65.3 million during the quarter, a slight decline on the same period last year when Esat made €66.6 million. The results also show Esat BT cut its operating expenditure by almost €6 million over the past quarter, down to €23.2 million in June 2002 from €29.1 million in March 2002. During the quarter to June last year, operating expenses were €31.6 million.

Mr Bill Murphy, Esat BT's chief executive, said the results were a good start and would improve further. He said the firm had signed a contract with the Government and was winning customers due to the fallout from WorldCom.