BT third-quarter results 'slightly below' its expectations
BT said on Thursday that its third-quarter results were "slightly below" its expectations, as it reported a 3% decline in revenue and a 4% fall in core earnings and warned that the government's decision to cap Huawei's involvement in 5G will cost the telecoms company around £500m.
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In the three months to the end of December, revenue fell to £5.78bn from £5.98bn, while adjusted earnings before interest, tax, depreciation and amortisation declined to £1.98bn from £2.06bn. The results reflect the impact of regulation and competition.
Chief executive Philip Jansen said the company remains on track to meet its outlook for the full year despite delivering results slightly below its expectations for the third quarter.
"We continue to invest in the business. During the quarter we launched Halo, the UK's ultimate converged plan, which will give homes and businesses the best connection and service. We've continued to use our national scale and local presence across the UK to provide customers with the best possible experience, for example by meeting our promise to answer all customer calls in the UK and Ireland and bringing BT sales and service back to the high street in nearly 500 BT/EE stores."
The company also said that the government’s decision to allow Huawei to have a limited role in the UK’s 5G networks will cost BT an estimated £500m over the next five years.
"The security of our network is paramount for BT," said Jansen. "We therefore welcome and are supportive of the clarity provided by Government around the use of certain vendors in networks across the UK and agree that the priority should be the security of the UK's communications infrastructure."
At 0905 GMT, the shares were down 4.2% to 168.06p.
Will Ryder, equity analyst at Hargreaves Lansdown, said: "The government’s decision on Huawei’s role in the UK’s 5G network was always going to leave someone worse off. BT thinks it’s going to cost them an extra £500m. It’s likely the regulator will try to limit the amount that gets passed onto the consumer, so BT may end up taking a lot of it on the chin.
"BT’s trading results were disappointing, but not overly so. Declining revenue and EBITDA across most major segments is a shame, although Openreach managed to grow revenue 2% on the back of a higher rental base. Ultimately, we don’t think the group’s long term outlook is changed dramatically by today’s announcement, though it hasn’t improved."