	british telecom cautious on ings prospects british telecommunications plc s bty l profit growth prospects for the coming years will be reduced by increasing competition and continued costs for replacing old telephone systems deputy chairman graeme odgers said speaking at a news conference on the third quarter results which were released earlier today odgers said the company faced heavy costs for installing new digital telephone systems in britain for three to five years he said mercury communications ltd a cable and wireless plc cawl l subsidiary was becoming a significant competitor odgers said mercury was seeking to make inroads into some of british telecom s most profitable areas one company official privately estimated that british telecom still had a pct share of the u k telecommunications market but feared that this could slip to or pct the recent two and a half week engineering strike which lead to some disruption in service could well have encouraged clients to consider using the mercury system odgers said however he forecast that the last quarter s results overall should not be adversely affected by the walkout he calculated salary savings as a result of the strike at mln stg and while loss of income on telephone calls should be limited revenue probably dropped on peripheral activities but on balance odgers said that group s financial strength economies of scale and the fact that it operates in a growth industry will help produce annual profit increases for the forseeable future british telecom will also seek to expand into manufacturing he said adding that research and development expenditure will rise both in terms of value and compared with the current proportion of two pct of overall turnover analysts said the company s downbeat forecasts helped shares dip to p in mid afternoon down p from yesterday s close and off an early high of p philip augar of stockbrokers wood mackenzie and co ltd said the market expects slower profit growth but forecast a seven to eight pct rise in both ings per share and pretax profit over the next two years in the financial year pre tax profit rose to billion stg from billion augar noted that a government imposed formula linking charges to inflation meant that the company s scope for raising prices was limited as long as inflation remains low reuter 
