BT sees strong fibre uptake in third quarter

Just as new chief executive Allison Kirkby was taking the reins, BT revealed a third quarter of strong customer demand for fibre-to-the-premises (FTTP) products at its Openreach division but with headwinds still blowing back performance at its business division.

In its trading update for the nine months to 31 December 2023, BT reported pro forma adjusted revenue of £15.8bn, up 3% on the previous financial year. This was due mainly to price increases and fibre-enabled product sales in the Openreach business; increased service revenue in the consumer business line, with 2023 annual contractual price rises being aided by higher roaming and increased FTTP connections; and small to medium-sized business (SMB) trading momentum and price rises in the business division.

Revenues were offset partially by legacy product declines. Looking at revenues and yearly comparisons for individual business lines, BT’s consumer business brought in £7.463bn, up 4%, while Openreach generated £4.574bn, a rise of 7%. Business division revenues were flat at £6.127bn.

Pro forma adjusted EBITDA for the nine months was £6.1bn, up 3% on an annual basis, with revenue flow through and cost control more than offsetting cost inflation and one-off items in the prior year. Consumer EBITDA was £2.008bn, up 4% year-on-year, while that at Openreach was £2.903bn, rising sharply by 11% for the year. This all led to a reported profit before tax of £1.498bn, up 15% compared with the first nine months of the 2022 fiscal year.

Investigating performance for the third quarter itself, consumer revenues were up 5% annually to £2.56bn while Openreach generated £1.521bn, up 7% compared with the same period a year ago. EBITDA was £2.028bn, flat annually.

Outlining highlights for the three months, BT pointed to an FTTP build rate accelerating to 73,000 per week, delivering a record of 950,000 premises passed in the quarter. BT’s FTTP footprint has now expanded to 13 million premises, with a further six million where the initial build is underway. It also noted strong Openreach customer demand for FTTP with net adds of 432,000 in the quarter. Total premises connected reached 4.4 million at the end of the quarter, with increased take-up of 34%. BT has set itself a target of passing 25 million premises with gigabit fibre broadband by 2026.

The company’s retail FTTP base grew by 46% year-on-year to 2.4 million, of which consumers accounted for 2.3 million and businesses 100,000. The telco’s EE network’s 5G base grew by 30% year-on-year to 10.3 million.

Before joining BT Group, Kirkby was president and CEO of Swedish multinational telecommunications company and mobile network operator Telia Company. She moved into the TMT sector in 2010, initially joining Virgin Media. She was also president and CEO of Danish telco TDC from 2018 to 2020, and president and CEO of Tele2 AB from 2015 to 2018, the largest challenger telecommunications company in Sweden and the Baltics. She has been a non-executive director at BT Group since 2019 and is also a non-executive director and member of the audit committee of Brookfield Asset Management.

Commenting on BT’s performance in the third quarter, Kirkby said: “BT Group has delivered another quarter of revenue and EBITDA growth, while rapidly building and upgrading customers to our full-fibre broadband and 5G networks, and we continue to be on track to achieve our financial outlook for the year.

“We are providing great digital connectivity and services, while laying the foundations for future growth that will benefit our customers, investors and the UK. As I assume the role of chief executive, we remain committed to our purpose and our strategic focus, and I am looking forward to leading BT Group into its next phase of development.”