Profits down spending up at BT

BT saw revenues and earnings decline in the nine months to the end of 2020, while spending on fixed and mobile network infrastructure increased.

The UK telco group posted a 7% year-on-year revenue decline to £16.06 billion on the back of the Covid-19 impact at its consumer and enterprise businesses, as well due to ongoing legacy product declines and the sale of business units in Spain, France and Latin America. As a result, adjusted EBITDA fell by 5% to £5.6 billion – although some of the decline was offset by sports rights rebates in the first half of the year and other cost-saving efforts – and pretax profit and normalised free cash flow were both down by 17%.

“We delivered results in line with our expectations for the third quarter and remain on track to deliver our 2020/21 outlook despite even greater Covid-19 restrictions than previously forecast,” said BT chief executive Philip Jansen, in the results announcement.

BT was, understandably, more keen to comment on its operational performance, which showed solid, if not stellar, growth in both fibre and 5G rollout.

Openreach booked “record FTTP orders” of 17,000 per week in the last quarter of the calendar year, during which time it was rolling out fibre to an average of 42,000 premises per week. It ended the period with a footprint of 4.05 million and reiterated that it is on track to reach 4.5 million by March, despite the latest Covid-related restrictions in the UK. It needs to average around 35,000 premises passed per week in Q1 to hit that target, so based on these latest figures, it should get there.

Given the cloak of secrecy around customers numbers in the UK retail broadband market – Sky started it a few years ago – BT did not report full operational figures. However, it does report its, slightly nauseating, “best network” figures, which essentially means it is willing to tell us how many high-spend customers it has. BT ended the reporting period with 686,000 FTTP customers, up by 88,000 over three months and an increase of 202,000 on-year. That’s a fairly solid growth rate, but take-up in the UK is still clearly something of an issue.

BT’s “best network” stats also include its – well, EE’s – 5G ready customer base, which was up to 2.14 million by the end of 2020, from 53,000 a year earlier.

Rolling out fibre and 5G doesn’t come cheap though.

Capital expenditure was up by 5% in the nine months to £3.03 billion, primarily driven by increased fixed and mobile network investment, BT said.

“With no material impact expected from the Brexit deal and our resilient results so far this year I remain confident in our EBITDA expectation of at least £7.9 billion for 2022/23,” Jansen said.

“Looking further ahead our new Digital unit will enable us to accelerate our digital and business transformation programmes and to deliver digital platforms that bring together best-in-class services for our customers, further securing a brighter and more sustainable future for the group,” he added.

BT is making the right noises, but ultimately it will be all about the execution.