BT profits rocket on higher bills and lower costs

BT’s profits rose significantly in the first half of the current financial year, buoyed essentially by stable revenues help by increased prices and cost cutting measures.

The UK operator’s pretax profit for the six months to the end of September came in at £1.1 billion, an increase of 29% on the previous year. Meanwhile adjusted EBITDA was up by 6% on a reported basis to £4.1 billion, the increase driven by revenue flow through and strong cost control, BT said.

The telco’s reported revenue of £10.4 billion was in line with the same period last year, maintained by a number of factors. In BT’s words, the figure can be attributed to “increased fibre-enabled product sales, inflation-linked pricing and improved lower margin trading in Business partially offset by legacy product declines.”

Various different factors in there, but naturally the one capturing all the headlines is around those controversial inflation-linked price hikes earlier in the year. Again. The picture from BT’s first quarter results was very similar.

Just to recap, at the back end of last year and the start of this, the UK’s altnets went on the offensive about the annual price rises their larger rivals tend to introduce in the spring. The fact that many link price rises to inflation, BT included, coupled with the cost-of-living crisis, meant that the increases would be much greater and more keenly felt than in recent years. BT was the most often quoted example, its consumer price index (CPI)-plus 3.9% formula to calculate its price rises meaning an increase in bills of north of 14% for many customers. The furore was such that UK regulator Ofcom said it would look into it and launched an investigation.

It makes sense, then, that everyone is now talking about those price rises and the impact they are having on operators’ businesses. But there’s more to BT’s topline stability than simply milking consumers. The telco itself was keen to point out that it’s fibre business is growing, for example. It has more customers as well as just charging customers more.

Its retail fibre-to-the-premises (FTTP) customer base grew by 48% on-year to 2.2 million, the bulk of which were consumer additions. Openreach, meanwhile, reported 364,000 FTTP net adds during the second quarter, which increased its uptake rate to 33%. Its build rate grew to 66,000 premises per week, equating to 860,000 premises passed during Q2. Openreach’s FTTP footprint now extends to 12 million premises, in addition to a further 6 million where initial build is underway, BT said.

It also noted that its 5G customer base now stands at 9.9 million, an increase of 42% year-on-year, and highlighted the launch of New EE last month, extending the mobile brand into the broadband and TV spaces and using it to push into adjacent markets. Future results announcements will give us some visibility on how that pans out.

Those future results presentations will no longer be presided over by CEO Philip Jansen though, who is due to leave the company in a couple of months.

“Our delivery in the first half means we are confirming our financial outlook for FY24 with normalised free cash flow now expected towards the top end of the guidance range, and we are declaring an interim dividend of 2.31 pence per share,” Jansen said.

“BT Group has a bright future and I’m pleased to be handing the baton to Allison Kirkby early in the new year,” he added. “She knows the sector, she knows the company and she’s the right person to lead BT Group from this position of operational strength.”

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