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BT: Challenging conditions hit revenue at FTSE 100 giant

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BT shares traded lower by as much as 3.9 per cent in early deals this morning after the company downgraded its growth outlook for the year.

The company reported a slight decline in revenue for the half-year ended 30 September 2024 due to what it has called challenging conditions in its business arm and more competition in the consumer market.

Due to these headwinds, the firm lowered its growth outlook for the year.

BT said adjusted revenue had declined three per cent in the period to £10.1bn due to “challenging conditions in business, principally driven by non-UK trading in our global and portfolio channels.”

Meanwhile, the company also said its consumer-facing business took a hit due to lower inflation-linked price hikes, competition in the market and lower customer numbers.

Overall, BT reported adjusted earings before interest, tax, deprecation and amortisation (EBITDA) of £4.1bn, up one per cent year on year thanks to lower costs.

Reported profit before tax came in at £1bn, down 10 per cent due to lower revenue, higher costs and additional finance expenses.

BT guides on future outlook

The company has benefitted from lower capital spending over the past two years, and today’s results showed more of the same.

While the company’s top and bottom lines took a hit, it reported capital spending for the period of £2.3bn, down two per cent, as BT noted its peak capital spending had come to an end.

Normalised free cash flow in the period hit £0.7bn, up 57 per cent due to higher EBITDA, working capital flows and a tax refund.

The company reported net debt of £20.3bn at the end of September, up from the £19.5bn reported at the end of March. BT said the higher level of debt was due to scheduled pension payments and the timing of the final dividend.

On the dividend, BT declared an interim dividend of 2.4p per share, up 2.3 percentage points from the half-year payout.

For 2025, the company said it expected to report another modest decline in revenue, but continued growth in EBITDA due to the lower capital spending demands.

Allison Kirkby, chief executive, said: “We have accelerated the modernisation of BT Group in the first half of the year. We’ve ramped up our full fibre build and connections, seen further improvements in customer satisfaction, and our cost transformation contributed to growth in EBITDA and normalised free cash flow despite revenue declines driven by our non-UK operations and a competitive retail environment.”

“We are confirming our EBITDA, capex and cash flow guidance for FY25, albeit on lower revenue guidance. We remain firmly on track to meet our long-term cost savings and cash flow targets, and today announce an interim dividend of 2.40pps. The accelerated modernisation of our operations, combined with a focus on connecting the UK, puts us in a strong position to generate significant value for all our stakeholders.”