Thursday, November 4, 2021

BT looks toward Openreach FTTP build for growth

BT reported revenue of £10,305m for the half year to 30 September 2021, down 3%; driven by revenue decline in Enterprise and Global, flat in Consumer, and partially offset by growth in Openreach. Adjusted EBITDA amounted to £3,748m, up 1%, with revenue decline more than offset by lower costs from  transformation programmes and tight cost management.

Some highlights:

  • Ten communication providers including Sky and TalkTalk signed up to Equinox, Openreach's national long-term FTTP pricing offer
  • Record Openreach FTTP build in Q2 and footprint now at almost 6m; expected average build costs lowered to £250-£350 per premises passed
  • Openreach delivered strongest ever H1 for repairs on time at 87.1%, with highest proportion of customers back in service within SLA
  • Consumer and Enterprise have now connected over 1m homes and businesses to FTTP
  • FTTP joint venture: with FTTP build costs coming down and take-up ahead of expectations, decided to retain 100% of the project for shareholders and to remain fully focused on driving build and take-up
  • Launched Eagle-i, the company's flagship security platform for predicting and preventing cyber-attacks for enterprises
  • Delivered £1bn of gross annualised savings 18 months early at a cost of £571m
  • Growth in fixed and broadband ARPC from Q1 into Q2 due to our convergence strategy and CPI+ price rise
  • 5G ready customer base over 5.2m

Philip Jansen, Chief Executive, commenting on the results, said

"These results demonstrate an acceleration of pace in the transformation of BT. We are creating a better BT for our customers, the country and our shareholders. We’re going further and faster on the UK’s next generation connectivity; we’re modernising BT and bringing down costs; and we’re reinstating the dividend today, as planned.

"After a record six months, Openreach has now rolled out full fibre broadband to almost 6m premises and continues to lower its build cost. Its three largest customers are signed up to the new pricing offer as we see rapid adoption of what will be the UK’s first nationwide full fibre network spanning 25m premises by 2026. Meanwhile, our 5G network now covers over 40% of the UK's population and we have over 5.2m 5G ready customers. Together, our networks provide our customers with an unrivalled level of connectivity.

"While we are serving our customers better than ever, BT is also changing rapidly internally. We have hit our £1bn cost savings target 18 months early, which allows us to bring forward our FY25 target for £2bn of savings to FY24. This is all part of creating a leaner BT with simplified processes and improved customer experiences.

"BT is on track and with results in-line with our expectations, we are today confirming our financial outlook for FY22 and FY23. Looking further out, as we pass the peak of our fibre build and move towards an all-fibre, all-IP network, we expect a reduction in capex of at least £1bn and lower operating costs of £500m. From these two factors alone, by the end of the decade we expect an expansion of at least £1.5bn in normalised free cash flow compared to FY22, and that's before any benefits from increased revenue and further transformation efficiencies. Our progressive dividend policy will be underpinned by these increased cash flows as we move to sustainable growth going forward."

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