BT records 8% revenue decline but raises EBITDA outlook
Covid-19 has pushed BT’s revenues down 8% to £10.59 million, according to its latest financial results.
In particular the pandemic has delivered a hit to BT Sport revenues, while there has been a reduction in business activity in the enterprise units and declines in legacy products.
Adjusted EBITDA stood at £3.721 million, a decline of 5%, driven by the fall in revenue, but partly offset by sports rights rebates, savings from BT’s modernisation programme and other cost initiatives including Covid-19 mitigating actions.
The modernisation programme delivered £352 million in gross annualised savings at a cost of £163 million.
Chief executive Philip Jansen said: “BT delivered financial results in-line with expectations for the first half of the year, thanks to strong operational performance during exceptional circumstances. Customer demand during the pandemic has shown how critical our networks have become, and our significant network investments have helped us double the number of Openreach’s FTTP orders compared to this time last year and have seen our leading 5G network expand to 112 towns and cities across the UK.
"We continue to invest to make BT more competitive and I’m pleased to see the quality of our products and services improving. At the same time, we are firmly on track with the delivery of our modernisation programme and have delivered £352m in cost savings in the first half of the year.”
In more positive news, BT said its fibre-to-the-premise (FTTP) and 5G roll outs have boosted its performance, setting it up for future growth.
BT said its FTTP rollout reached “record levels” in Q2 with a run-rate of 40,000 premises per week and a total of 3.5 million premises connected to date. Openreach will stop selling copper products to around 1.8 million FTTP-enabled promises by the end of September 2021. Additionally, BT noted a 60% year on year increase in its consumer FTTP customer base, while fixed and mobile convergence stood at 21.4%.
On 5G - for which BT has partnered with Ericsson and Nokia - the next generation customer base now exceeds one million customers and 5G services are live in 112 towns and cities across the UK. Boosting services further, BT has agreed to a partnership with Belfast Harbour to deploy a 5G private network. BT has also announced private networks in collaboration with Nokia for the mining industry.
Following the results, BT will now raise the lower end of its EBITDA outlook range for the year and publish an EBITDA expectation of at least £7.9bn for 2022/23. Jansen said the growth will be driven by continued recovery from the pandemic, enhanced sales of converged and growth products and savings from the modernisation initiative.
“In combination these factors will more than offset legacy product declines,” he added.
Noting “sustainable growth from this level forward”, Jansen said: “This performance has given us confidence to raise the lower end of our EBITDA outlook range.
“The growth in EBITDA underpins the planned reinstatement of our dividend next year whilst ensuring that we can continue to drive value-creating investments in our networks and products.”