BT Says It's Trading In Line With Expectations As Revenue Slides And Pre-tax Profit Shrinks

BT's revenues slipped during the three months to the end of June – when French-owned Altice took a 12.1 per cent stake in the business and the telco went some way to resolving an industrial dispute.

Overall – across its consumer, enterprise, global, and infrastructure businesses – the former state-run monopoly reported revenues of £5.071bn, down 3 per cent year-on-year and trading as expected, BT said.

Consumer was one of the divisions to grow, up 1 per cent to £2.382bn. BT said this was primarily due to BT Sport subscriptions and higher direct handset sales. "Year-on-year fixed and mobile are down due to the ongoing impact of COVID-19, lower out-of-contract prices, copper price reductions to address back book pricing, and the continued decline of our voice-only customer base and call volume," it said.

The perennially shrinking Enterprise business unit didn't surprise, declining 5 per cent to £1.287bn. Blame for this was apportioned to legacy products, particularly a slip in Wholesale mobile Sales due to the "ongoing migration of an MVNO customer." Revenue was flat in SME but went backwards in corporate, public sector, and the aforementioned Wholesale wing.

BT Global crashed by a whopping 21 per cent to £785m as customer activity reduced, dampened by the pandemic, "resulting in delayed project-based spend and equipment sales. The prior year also benefited from increased revenue, including high-margin conferencing minutes, as customers went into lockdown for the first time."

The UK telco said it continues to press ahead with its fibre broadband rollout with digital utility outfit Openreach having now plumbed in full-fibre to more than five million homes and businesses. This helped Openreach's revenues climb 5 per to £1.34bn.

Growth was made up, in part, by "higher rental bases in fibre-enabled products, up 14 per cent, and Ethernet, up 7 per cent, and higher provisioning due to the COVID-19 impact of suppressed activity in the first quarter of the prior year," BT stated.

Pre-tax profit for the group was down 4 per cent on a year ago to £536m.

BT is still working through a multi-year transformation agreement involving the building out of next-generation networks and upping IT skills. BT hired Harmeen Mehta in January to run its Digital unit as chief digital and innovation officer. The new unit will push ahead with digital transformation inside BT and promote cloud, data, and AI services to customers in specific industries.

Today's trading announcement was used by BT to confirm it had hooked up with Microsoft to beef up its enterprise voice, security, and industry-focused services – an area BT has identified as a key growth area.

The company hasn't grown its top line since 2017 and CEO Philip Jansen is trying to revamp the business, inheriting an aggressive programme from his predecessor that includes chopping 13,000 jobs and exiting 90 per cent of the corporation's real estate. This has led to some friction with the Communication Workers Union.

Jansen said today its Q1 numbers reflected "improved trading across most of our business and the positive benefits of our plans to modernise BT." Overall, the results were "in line with our expectations during the quarter," he said.

The announcement follows last week's news that BT had invested in US-based cyber defenders Safe Security as it looks to tap into the growing digital security market.

BT's quarterly update coincided with Virgin Media O2's announcement to upgrade its fixed network to full fibre-to-the-premises (FTTP) by 2028.

The company – formed by the recent merger of Virgin Media and O2 – said that once complete, it would be capable of delivering symmetrical 10Gbps download and upload speeds to some 14.3 million homes and business connected to its network.

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Virgin also dangled the prospect of making its network available to other providers on a wholesale basis, something it has not considered in the past.

Both sets of news highlight the importance of the race to rollout fibre across the country. But there are some who believe that when the medals are awarded, the winners won't be the ones who get their cables in the ground fastest or who can connect to the most homes and businesses.

Instead, customer service, the timely fixing of faults, and ensuring that advertised speeds are met will also help separate the winners from the losers.

In a statement, Virgin Media said: "By the end of this year, Virgin Media O2 will deliver speeds of 1.1Gbps across its entire network, meeting the government's stated broadband targets four years ahead of schedule.

"The company will also continue to expand its fibre footprint to new areas through its Project Lightning programme and is actively exploring further expansion opportunities to reach millions more premises, with discussions ongoing with strategic and financial partners." ®