Catherine NashThank you, and welcome, everyone. I'm Catherine Nash, IR Director here at BT. On the call today, we have Ian Livingston, Chief Executive; and Tony Chanmugam, Group Finance Director. Tony will start with an overview of the financials for the third quarter and then Ian will go through the lines of business. We'll then hand over to you for questions. In the room with us today, we also have the chief executives from all our lines of business. Before we start, I'd just like to draw your attention to the usual disclaimer on forward-looking statements. Please see this slide that accompanies today's call and our latest annual report on Form 20-F for examples of the factors that can cause actual results to differ from any forward-looking statements we may make. Both the slide and the annual report can be found on our website. And I'll now hand over to Tony. Anthony Everard Ashiantha Chanmugam Thanks, Catherine. Good morning, everyone, and thank you for joining our results call. I'll start by running through the financial results for the third quarter. We've had a reasonable quarter in a challenging economic environment, with results broadly in line with or slightly ahead of expectations. Revenue in the quarter was down 5%. This includes the impact of transit revenue, which fell GBP 109 million in the quarter. For the year-to-date, transit revenue was GBP 345 million lower. In terms of our more relevant measure, underlying revenue, excluding transit, was down 3%. As anticipated, this was a weaker performance than in the second quarter, mainly due to around GBP 60 million of contract milestones in Global Services, which were achieved in Q2 rather than this quarter. It also reflects tougher comparatives from some of our lines of business as I mentioned last quarter. For the year-to-date, underlying revenue excluding transit was down 1.8%, which is consistent with our outlook for the full year. We delivered another quarter of growth in EBITDA, which was up 3%, reflecting our cost transformation programs. I'll say more on these shortly.
Together with a small decline in depreciation and a lower interest charge, profit before tax grew by 18%. As a result, EPS of GBP 0.061 was 13% higher than last year. Free cash flow before specific items was GBP 65 million higher, and this contributed to a further reduction in our net debt to GBP 7.7 billion. This is a reduction of over GBP 900 million compared with a year ago. In fact, over the last 3 years, our net debt has come down by over GBP 3 billion.Turning to free cash flow in more detail. Cash CapEx was GBP 31 million lower than last year, partly due to the timing of payments. CapEx in the fourth quarter is typically higher, so expect our CapEx to upturn in line with our outlook of around GBP 2.6 billion for the full year. Interest was GBP 67 million lower, reflecting our lower debt levels. This was offset by higher tax due to our higher profits and as we return to a more normalized tax position. Working capital and other were GBP 4 million lower than last year. There are a number of moving parts within this, so I'll just highlight some of the larger ones. Working capital in Openreach was down after we paid later than contracted by some operators. This was largely offset by a better working capital position elsewhere within the group. Our regular pension contributions were also low this quarter. If you remember, we said these would reduce this year after we made some overpayments last year. Overall, free cash flow before specific items was GBP 65 million higher than last year, with lower CapEx and lower regular pension contributions being the main drivers. Finally, we incurred a cash cost on specific items of GBP 48 million, which relates to Global Services restructuring and the property rationalization programs. The full year cash cost for these should still be around GBP 180 million. For the quarter, free cash flow, after specifics, came in at GBP 586 million, a GBP 71 million improvement on the prior year.
Turning to cost. We reduced operating cost by GBP 314 million in the quarter and by around GBP 700 million or 6% for the 9 months. Gross labor cost reduced by GBP 124 million or 3% for the 9 months. This was partly offset by higher leaver cost, which increased by GBP 32 million, as more people participated in the leaver schemes within Openreach and BT Operate. The amount of labor cost that is capitalized has come down, which meant that overall net labor costs reduced by GBP 51 million or 1%. Other costs have reduced by GBP 655 million or 9% in the 9 months, driven by low transit revenues and as a result of our cost transformation activities.Read the rest of this transcript for free on seekingalpha.com