BT Q1: ‘A good start’

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Gavin Patterson, BT Chief Executive, has described the telco’s first quarter 2018 results as “a good start to the year”, making good progress against its strategy

BT reported revenue of £5.715 billion, with underlying revenue down 2 per cent as regulated price reductions in Openreach and declines in its enterprise businesses offset growth in its consumer business. Adjusted EBITDA rose to £1.8 billion, mainly driven by stronger handset margins in its consumer business and restructuring related cost savings. Reported profit before tax was £704 million, with adjusted profit before tax up 3 per cent at £816 million.

Revenue growth was driven by increased mix of high-end smartphones, growth in the SIM only base and customers now paying for BT Sport, partially offset by solus voice price reductions. Flat operating costs enabled the revenue growth to flow directly through to EBITDA. BT expects sports rights and device costs to increase later in the year. The launch of BT Plus, its first Consumer converged offering, is showing encouraging early signs with more than 100,000 customers signed up in the quarter.

In addition, BT became the first major UK pay-TV provider to offer Amazon Prime Video via the set-top box. EE continued to maintain its network leadership, moving into network convergence, becoming the first UK network to launch smart number technology allowing customers to use the same number across multiple devices.

“We’ve made a good start to the year,” said Patterson. “We are making positive progress against our strategy. Our customer experience metrics continue to improve and we have seen the successful launch of new converged products including BT Plus, our first Consumer converged offering and 4G Assure, for business customers. Initiatives to transform our operating model have seen a gross reduction in c.900 roles across the Group and improved cost performance.”

“EE continues to maintain its network leadership and will switch on the UK’s first live 5G network trial in October. Openreach continues its FTTP network deployment and is currently building to c.10,000 premises per week. New Openreach wholesale pricing will incentivise communications providers to encourage more of their customers onto better services and ultimately move the vast majority of Britain’s homes and businesses onto superfast and ultrafast platforms. We welcome the initial outcome of DCMS’s Future Telecoms Infrastructure Review and Ofcom’s approach to future regulation and look forward to further engagement with all our key stakeholders to ensure greater clarity, certainty and support as we look to realise our broader investment ambitions. Our outlook for the year remains unchanged.”

According to technology, media and telco analyst Paolo Pescatore, the consumer unit seems to be in better shape than other business segments, with uncertainty still surrounding the company given the search for a new CEO. “Hopefully this will be announced at its next fiscal half year results. This in turn will provide some guidance to the future direction of the company. For sure, expect more changes and arguably more pain,” he advises.

“The market is rapidly changing and BT is starting to get left behind. It needs to move far more quickly to ensure it is well placed to take advantage of the opportunities that lie ahead in convergence. Undoubtedly the company has all the assets to compete head on with existing and new rivals.”

“All providers will be seeking to lure households with attractive offers ahead of the new Premier League season. BT must do a better job of signing up TV subscribers and maximise BT Sport across its base.”

“The next two quarters represent a key period for the company as it seeks to execute on its new consumer strategy.”


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