BT on track to meet forecasts as revenues slip

BT Group updated the market on its trading for the third quarter on Thursday, reporting a 1% fall in revenue to £17.56bn.

The FTSE 100 telecoms giant said underlying revenue for the nine months ended 31 December was down 0.9%, as growth in its consumer business was offset by regulated price reductions in the Openreach network division, and declines in its enterprise businesses.

Adjusted EBITDA was “broadly flat” at £5.55bn, which the firm said was primarily driven by revenue growth in its consumer business and restructuring related cost savings, offset by the revenue decline in Openreach and enterprise.

Reported profit before tax rose 20% to £2.09bn, while adjusted profit before tax slipped 1% to £2.49bn.

BT said normalised free cash flow stood at £1.74bn for the period, which was down 11% - mainly driven by increased cash capital expenditure.

Reported capital expenditure rose £239m to £2.81bn, which BT claimed was due to increased investment in fibre-to-the-premises infrastructure, and the increase in the Broadband Delivery UK (BDUK) grant funding deferral, as announced last quarter.

Its overall outlook was reiterated, notwithstanding significant market and regulatory pressures, with the board saying it expected EBITDA to be around the top end of its guidance for the 2-19 financial year.

On the strategic front, BT Group reported 10 successive quarters of improvement in its net promoter score, which was up 5.3 points, while its ‘Right First Time’ measure rose 3.2%.

Its consumer launched the next version of its converged product, BT Plus, which guaranteed wi-fi in all rooms of a home, while its EE division demonstrated its 5G capability in London, with the plan to roll it out to the “busiest parts” of 16 UK cities in 2019.

Openreach was currently deploying fibre-to-the-premises in 14 locations under its 'Fibre First' programme, and recently announced a further 11 locations, bringing the total to 25.

Initiatives to “transform” BT’s operating model were also said to be on track; with its restructuring programme removing around 800 roles in the quarter.

BT also confirmed that Philip Jansen was taking over as its new chief executive officer from 1 February.

On the operational front, Openreach passed 1.7 million premises with its ‘Gfast’ copper broadband technology and 900,000 with fibre-to-the-premises, meaning more than 2.6 million total premises were now passed by its ‘ultrafast’ products.

Consumer fixed average revenue per user was ahead 5% at £39.60, with an increased mix of SIM-only reducing postpaid mobile average revenue per user by 0.9% to £21.40.

Its fixed churn was said to be returning to lower levels at 1.4%, while mobile churn stood at 1.3%.

BT introduced a ‘revenue generating unit’ (RGU) key performance indicator, at 2.37 products per household.

“We have continued to deliver consistently against our strategic objectives in a tough market, resulting in another sound quarter of operational and financial performance,” said chief executive officer Gavin Patterson.

“In consumer we launched the next version of our converged consumer offering, BT Plus with Complete Wi-Fi.

“Following successful trials in London we announced our plan to launch 5G in 16 UK cities in 2019.”

Patterson also highlighted the acceleration of Openreach’s FTTP commissioning, which had now passed 890,000 premises.

He said the company was ready to expand its FTTP programme up to and beyond 10 million premises “if the conditions are right”.

“Our overall outlook for the full year remains unchanged, with EBITDA around the top end of our guidance for the 2019 financial year.

“We continue to expect regulation, market dynamics, cost inflation and legacy product declines to impact in the short term before being more than offset by improved trading and cost transformation by our 2021 financial year.

“I am handing over the business with good momentum behind its ongoing transformation programme and wish my colleagues all the best for the future.”