BT Group plc Results in line with expectations

BT Group plc (LON:BT.A) today announced its trading update for the first quarter to 30 June 2019.

Key strategic developments:

·     EE successfully launched the UK’s first 5G mobile network in six cities

·     BT named the UK’s major broadband universal service obligation provider by Ofcom

·     12 successive quarters of improvement in Group NPS¹, up 0.3 points

·     Openreach announced updated pricing for wholesale FTTP broadband and the next 36 locations in its FTTP rollout

·     BT welcomes the Government’s ambition for full fibre broadband across the country and is ready to play its part to accelerate the pace of rollout

·     Sale of BT Centre agreed for £210m and lease signed for new headquarters in Aldgate, London

Operational:

·     Openreach continues FTTP rollout at c.20k premises passed per week with 267k premises passed in the quarter; 3.7m ultrafast (FTTP and Gfast) premises passed to date

·     Consumer fixed ARPC £37.9 flat year on year; postpaid mobile ARPC £20.7, down 4.6% on Q1 2018/19 due to the impact of regulation and lower RPI price increases

·     Fixed churn down to 1.3% following customer experience improvements; postpaid mobile churn remains at 1.1%

·     EE first in 15 out of 16 RootMetrics tests for mobile network performance

Financial results:

·     Reported and adjusted¹ revenue of £5,633m down 1% with decreases in Consumer, Enterprise and Global

·     Adjusted EBITDA¹ down 1%² at £1,958m driven by lower revenues and higher spectrum fees and content costs, partly offset by reduction in costs from restructuring and transformation programmes

·     Reported profit before tax of £642m and adjusted¹ profit before tax of £749m, impacted by the higher upfront interest expense on the IFRS 16 lease liabilities recognised from 1 April 2019

·     Normalised free cash flow¹ of £323m down 36% reflecting increased capital expenditure and higher interest and tax payments, partially offset by working capital phasing

·     Reported capital expenditure of £931m up 11% primarily due to network investment and customer driven costs

·     Full year outlook maintained

Philip Jansen, Chief Executive, commenting on the trading update, said:

“BT delivered results in line with our expectations for the quarter, with adjusted EBITDA declines in Consumer and Enterprise partly offset by growth in Global. We are on track to meet our outlook for the full year.

“We made good progress during the quarter, including launching the UK’s first 5G network, delivering an improvement to our group net promoter score for the twelfth consecutive quarter, announcing the first nine cities in our consolidated office footprint, and being named the major broadband universal service obligation provider for the UK.

“In building a better BT for the future we need to be even more competitive. We will continue to take decisive action, including on price, to further strengthen our customer propositions and market position, both to respond to any short-term market pressures and to capitalise on longer-term opportunities.

“On network investment, we welcome the Government’s ambition for full fibre broadband across the country and we are confident we will see further steps to stimulate investment. We are ready to play our part to accelerate the pace of rollout, in a manner that will benefit both the country and our shareholders, and we are engaging with the Government and Ofcom on this.”