BT profits rise but revenues slip as UK giant ramps up full-fibre targets
BT has ramped up its targets for rolling out full-fibre broadband, despite posting a slip in revenues for the full year.
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The figures
Revenues dropped one per cent to £23.4bn in the year to the end of March.
Pre-tax profit rose two per cent to £2.7bn.
Net debt jumped 15 per cent to £11bn.
Earnings per share increased six per cent to 21.8p.
Capital expenditure rose 13 per cent to £4bn.
Why it’s interesting
BT’s full-year results are the first major test for new boss Philip Jansen, who took over from Gavin Patterson in February after a challenging period for the telecoms giant.
The firm has posted a decline in revenue over the last 12 months, which it blamed on price reductions in its Openreach division and declines in its enterprise businesses, in particular fixed voice.
But pre-tax profits rose two per cent over the period thanks to growth in its consumer business. Shares in BT ticked up marginally following the announcement.
BT said it has increased its targets for full-fibre broadband network, as it looks to focus investment in building the UK’s new network.
The company has increased its targets from 3m to 4m premises by March 2021, while it plans to deliver full-fibre to 15m premises by the mid-2020s, up from 10m.
“The vision is to return BT to being a national champion,” said chief executive Philip Jansen.
However, Jansen warned this will only be possible “if the conditions are right” with regards to regulation and policy.
BT said its mobile provider, EE, will launch 5G imminently and is on track to go live in 16 UK cities by the end of the year.
Questions have also been raised about BT’s commitment to costly sports broadcasting rights.
Jansen shrugged off concerns about BT Sport, saying demand for its services had been “astounding” and the company will be bidding at the next Champions League and Premier League option.
But he admitted BT is taking a “very disciplined approach” to sports rights and said it would not be expanding.
The board decided to maintain the dividend for the full-year, despite reports it might be slashed to fund the rollout of full-fibre.
The telecoms firm has completed the first year of its three-year transformation programme, cutting roughly 4,000 roles in a bid to simplify its business. But Jansen said the company has no further plans to reduce headcount.
“BT’s long-suffering investors will welcome the combination of a renewed growth strategy with an above-average income while they wait for it to be delivered,” said Tom Stevenson, investment director at Fidelity Personal.
“They will need to be patient – underlying earnings will be flat this year – but they will hope today’s news is enough to end recent years’ dismal share price performance.”
“Moves to accelerate plans for its fibre broadband rollout, 5G and cross-selling existing services can help increase the group’s bottom line, but also require significant investment,” said Paolo Pescatore, telecoms analyst at PP Foresight.
“In essence, the new chief executive needs to consider a radical new strategic approach including the future of global services, Openreach and the importance of costly sports rights.”
BT said it expects revenue to be down roughly two per cent in the year ahead.
What BT said
“While we are really well positioned in a very challenging and competitive UK market, we have a lot of work to do to ensure we remain successful and deliver long term sustainable value to our shareholders,” said chief executive Philip Jansen.
“We need to invest to improve our customer propositions and competitiveness. We need to invest to stay ahead in our fixed, mobile and core networks, and we need to invest to overhaul our business to ensure that we are using the latest systems and technology to improve our efficiency and become more agile.”