News
U.K. incumbent presents solid Q1 figures, confirms full-year outlook; new mobile unit posts lower revenues than in year-ago quarter.
BT on Thursday presented a strong set of first quarter financials including a small uptick in underlying revenue, but glossed over the fact that while recently-acquired EE drove reported topline growth, the mobile business actually saw revenues fall compared with the same period a year ago.
The U.K. incumbent posted group revenues of £5.78 billion, up 35% year-on-year due to the added contribution from EE, which became part of BT in January.
"Our integration of EE is progressing well, alongside our business reorganisation that took effect on 1 April," BT chief executive Gavin Patterson said, in a statement accompanying the numbers.
"EE performed strongly, both financially and commercially, and our customers are seeing the initial benefits of our acquisition with BT Sport now available to EE pay monthly customers," he added.
EE added £1.24 billion to BT’s top line in the three months to the end of June. BT did not provide comparative figures, but EE’s own report from the year-ago quarter suggests a revenue decline; the mobile operator generated operating revenue of £1.5 billion in the same quarter in 2015 while mobile services revenues came in at £1.38 billion.
BT did not separate out subscriber figures for EE, but said its total mobile base reached 30.3 million by the end of June; it added 224,000 postpaid customers in the quarter, just under half of whom came via EE.
EE reported 96,000 net additions at its postpaid customer base in April-June last year. It had a total customer base of 30.9 million, but the figure included close to a million fixed broadband connections and 2.06 million M2M connections.
BT’s underlying revenue, excluding transit, rose by 0.4%.
Its Consumer, and Business and Public Sector divisions reported growth of 9% and 18% respectively, while BT Global Services posted a revenue hike of 5%, although this was primarily due to forex benefits; underlying Global Services revenue was flat, BT said. Global Services’ order intake for the quarter was £1 billion, down 11%.
Consumer revenues came in at £1.18 billion, with growth boosted by a 21% increase in broadband and TV revenue, and a 3% increase in calls and lines revenue, BT said.
The firm added 76,000 retail broadband customers, which it says represents 79% of net adds in the U.K.’s DSL and fibre broadband market. It recorded 181,000 retail net additions in superfast fibre broadband, giving it 4.3 million customers in total.
All eyes have been on BT’s Openreach business this week. Regulator Ofcom on Tuesday stopped short of forcing a full structural separation, but recommended that the business have its own board and budget, amongst other things. The telco’s rivals were deeply unimpressed by the ruling and are still campaigning for a full split.
Openreach reported quarterly revenues of £1.25 billion, flat on the year-ago quarter. Regulatory price reductions had a negative impact of around £50 million, or 4% of revenue, but this was offset by 33% growth in fibre broadband revenue, BT said.
Openreach was the biggest contributor to BT’s adjusted EBITDA in Q1, bringing in £632 million, down by 1% on last year.
At group level, EBITDA reached £1.82 billion, up 25%, although underlying EBITDA fell by 2% as a result of the launch of BT mobile handsets.
"We’ve made a good start to the year, with growth in revenue and strong cash flow, said Patterson. "We’re on track to deliver our full year outlook."
BT expects underlying revenue growth for full-year 2016/17 and predicts adjusted EBITDA of around £7.9 billion following a £100 million investment in mobile handsets.
