BT bets on budget provider amid broadband customer losses
BT has lost more broadband customers than expected, a sign that even its £15bn fibre rollout is struggling to retain customers from drifting to cheaper rivals.
Openreach, BT’s network arm, reported a net loss of 242,000 broadband lines in the second quarter of its financial year, worse than the 205,000 analysts had pencilled in.
The company blamed “increased competition and a weaker broadband market,” and said it would rely on its broadband brand to appeal to more price-conscious customers.
Speaking to reporters after the results, chief executive Allison Kirkby said the figures were “in line with BT’s own guidance” and stressed that the company was sticking to its full-year outlook.
“Our line losses in the quarter were exactly what we expected and in line with the guidance we gave at the start of the year,” Kirkby told reporters on Thursday. “We’ve now put new commercial offers into the market, and we’re seeing clear demand for high-speed fibre.”
BT said it still expects to lose around 900,000 broadband lines this fiscal year, largely in areas where it has yet to complete full-fibre coverage.
Kirkby added that 70 per cent of line losses were in regions “where fibre isn’t yet available,” suggesting that rivals are taking advantage of gaps in Openreach’s roll-out.
‘We’re building faster than anyone else’
Kirkby pushed back on suggestions that BT is losing ground, telling reporters the company remains the UK’s only nationwide builder of full fibre and is on track to reach 25 million premises by the end of 2026.
“We’re absolutely focused on getting to the 25 million homes we’ve committed to, and we’re on track to do that,” she said. “Once that’s complete, we’ll have effectively replaced our entire legacy broadband base.”
Asked about potential alt-net consolidation, Kirkby said BT would prioritise its own organic rollout for now but could look at opportunities “if they make economic sense.”
“We’re allocating our capital to our own build and take-up,” she said. “Beyond that, we’ll look at the market, but only for assets that complement our existing network and make financial sense for shareholders.”
Turning to value
BT is betting on its low-cost broadband brand, under its consumer division, to win back customers who have defected to other providers.
Kirkby explained that sitting alongside its premium EE and BT offerings will allow it to target different parts of the market without diluting its flagship brands.
“We’re very clear, we’re the premium player in the market and we value value ahead of volume,” she told reporters. “But after years of losing customers, we needed to stabilise and grow again. Using all three of our retail brands – BT, EE and Plusnet – is allowing us to reach more people with the services they want.”
The company has also faced headwinds in the mobile market, where consumers are holding on to handsets for longer and price competition is intensifying.
Kirkby said that new financing schemes, such as longer device payment plans, mean customers are upgrading every three to four years instead of every two years.
Financials under pressure
Group revenue fell three per cent in the first half of the year to £9.8bn, while pre-tax profit slipped 11 per cent to £862m.
BT’s total workforce was reduced by about 5,000 roles to 111,000 as part of its cost-cutting drive, contributing to £250m of savings in the half-year.
The company is targeting £3bn in annual savings overall.
Despite the decline in revenue, BT reaffirmed its outlook, stating that it remains on track to double free cash flow to £3bn by 2030.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “These numbers were meant to steady nerves but instead exposed cracks in BT’s core markets. The rise in broadband line losses points to a market under real pressure as rivals step up their game.”
Kirkby maintained that the broadband market overall remains “flat to slightly down” rather than in decline.
“It’s not weaker, it’s steady,” she said on a media call. “Some of the softness reflects fewer new homes being built and the end of the Covid bump, when people took second lines to work from home. Once housebuilding picks up, we’ll see growth again.”
BT’s challenge will be to balance its fibre and mobile investments with the reality of customers chasing cheaper deals.