BT Q1: “Strong start to the year”
July 27, 2023
By Colin Mann
UK telco BT has issued a trading update for the three months to June 30th 2023, with Philip Jansen, Chief Executive, commenting: “We’ve made a strong start to the year, in what remains a very competitive market, with improved customer satisfaction, pro forma revenue growth in all of our business units and pro forma group EBITDA up by 5 per cent. Openreach is now 44 per cent of the way through its full fibre build, and customer demand has continued to grow with a total network take-up rate of 32 per cent. Consumer is seeing solid pro forma growth driven by pricing and mix, as customers choose higher performance connections; and Business grew its order book, driving revenue growth for the combined unit. We continue to drive transformation across the group, and while there remains much to do it’s clear that our strategy is working and BT Group is set up for success.”
BT’s FTTP footprint expanded to 11 million premises, 44 per cent completion of 25 million target, with a further c.6.2 million where initial build is underway; 718k premises passed in the quarter at an average build rate of 55k per week.
Customer demand in Openreach for FTTP increased with Q1 orders up 34 per cent year-on-year and net adds of 383k, bringing network take-up rate to 32 per cent; total FTTP connections grew to 3.5 million.
Openreach broadband ARPU grew by 10.2 per cent year-on-year as a result of price rises and increased volumes of FTTP; Openreach broadband base down 126k in Q1 reflecting competitor losses combined with a weak broadband market and communications providers ceasing copper lines; BT continues to expect the Openreach broadband base to decline by around 400k in FY24
Consumer broadband ARPU increased 5 per cent year-on-year to £42 (€42.98) and Consumer postpaid mobile ARPU increased 9 per cent year-on-year to £19.7, both driven by CPI-linked pricing; churn remains stable for broadband and postpaid mobile at 1.1 per cent and 1.0 per cent respectively.
BT reported pro forma adjusted revenue £5.2 billion, up 4 per cent on Q1 FY23 as a result of increased fibre-enabled product sales and price increases in Openreach, increased service revenue in Consumer with 2023 annual contractual price rises being aided by higher FTTP base and higher roaming, and improved equipment trading in Business, offset partially by legacy product declines; reported revenue was up 1 per cent.
“BT is actively migrating customers from copper to full fibre and noted an increase in the FTTP take-up rate versus the previous quarter,” observes Luigi Bucci, Associate Vice President, Analyst at Moody’s Investors Service. “A positive sign in the context of the price increases implemented in April. However, BT lost more than 100 thousand broadband lines over the quarter, clearly a signal that competition remains intense. While this loss is in line with yearly guidance, keeping leadership in the fibre battle represents a challenge for BT.”
“ARPU growth over the quarter was strong. Growth will likely gradually decline over the year because of promotions and customers renegotiating their contracts, but the increase is still clearly a positive given Virgin Media O2 reported weak ARPU metrics for the quarter,” he suggests.