BT Group plc (LON:BT.A) announced today its results for the second quarter and half year to 30 September 2018.
Key strategic developments:
· Philip Jansen announced as new Chief Executive from 1 February 2019 – see separate press release on 25 October
· Nine quarters of successive improvement in customer experience metrics; Group NPS1 up 3.6 points and Right First Time2 up 2.7%
· Majority of major and a number of smaller communications provider customers signed up to Openreach’s volume related discounts
· 5G capability demonstrated by EE from a live site in Canary Wharf
· Initiatives to transform our operating model on track; restructuring programme removed c.2,000 roles in the first half
Operational:
· Nearly 2m total ultrafast premises passed; Openreach currently building FTTP to c.13,000 premises per week
· Consumer fixed ARPU up 1% to £38.3, with increased mix of SIM only reducing postpaid mobile ARPU by 0.5% to £22.0
· Mobile churn remains low at 1.2%; fixed churn increased to 1.6% reflecting the impact of recent price increases
Financial:
· Reported revenue of £11,588m down 2% and adjusted3 revenue of £11,624m down 1%4 as growth in our consumer business was offset by regulated price reductions in Openreach and declines in our enterprise businesses
· Reported profit before tax of £1,340m and adjusted3 EBITDA of £3,675m, up 2%4, mainly driven by higher volume and mix of high-end smartphones in our consumer business and restructuring related cost savings
· Net cash inflow from operating activities of £754m down £1,831m mainly due to £2bn contribution to BTPS. Normalised free cash flow3 of £974m down 22% due to increased cash capital expenditure and timing of working capital movements
· Reported capital expenditure up £140m at £1,833m due primarily to the increase in BDUK grant funding deferral following take up of Openreach’s volume related discounts
· Interim dividend of 4.62 pence per share; 30% of last year’s full-year dividend of 15.4 pence per share
· Overall outlook maintained. Based on current trading, we expect EBITDA to be in the upper half of our £7.3-£7.4bn range
Gavin Patterson, Chief Executive of BT Group, commenting on the results, said
“We continued to generate positive momentum in the second quarter resulting in encouraging results for the half year. We are successfully delivering against the core pillars of our strategy with improved customer experience metrics, accelerating ultrafast deployment and positive progress towards transforming our operating model.
“In Consumer, we continue to see strong sales of our converged product, BT Plus, and have seen good mobile sales following new handset launches. Last month EE demonstrated 5G capability from a live site in Canary Wharf. We have maintained momentum in our enterprise businesses despite legacy product declines.
“On 1 October we completed the transfer of 31,000 employees into Openreach, a key part of fulfilling our DCR commitments. Openreach has signed up the majority of its major and a number of its smaller communications providers to its new volume related discounts which should increase average broadband speeds across the UK. We are making positive progress on the key enablers to ensure that we can secure a fair return on our FTTP investment, and are ready to expand the FTTP programme up to and beyond 10 million premises if the conditions are right.
“Our strategy is delivering, with benefits evident from the steps we’ve been taking to simplify and strengthen the business and improve efficiency. Despite increasingly competitive fixed, mobile and networking markets and continued declines in legacy products there is no change in our overall outlook for the full year. Based on current trading, we expect EBITDA to be in the upper half of our £7.3 – £7.4 billion range.”
