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BT network investments dig into half-year profits
The need for speed, and the need to lay down and connect high-speed broadband and fibre, has put a break on the financial performance of BT over the first six months of its fiscal year
The need to make significant capital expenditure to improve the reach and competitive capability of its core infrastructure has put a break on the financial performance of BT over the first six months of its fiscal year.
For the half-year to 30 September 2019, BT reported revenues of £11.4bn, inching back 1% compared with the end of the first half of the previous year, attributed in the main to the impact of regulation, declines in legacy products, and strategically reducing-low margin business.
Profits before tax were £1.3bn, flat on the same period a year ago, and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was £3.9bn, down 3% due to lower revenues, increased spectrum fees, content costs and investment to improve competitive positioning.
Highlighting such investments made during the six-month period, capital expenditure grew 3% year-on-year to £1.8bn, reflecting its support of enhanced infrastructure, according to BT.
In this regard, BT pointed specifically to new products for consumer and business segments in 5G and fibre-to-the-premises (FTTP). The half-year saw 1.1 million fibre-enabled broadband net connections completed, resulting in more than 13.3 million customers now connected to fibre-enabled products.
It added that superfast broadband was now available to nearly 28 million premises. The Openreach ultrafast broadband network covers 4.2 million UK premises, comprising 2.4 million premises passed with Gfast and 1.8 million with FTTP. The fibre-enabled share of the broadband base increased from 42.5% at the end of the first half of 2018 to 48.3% by 30 September 2019.
The company’s 5G service is now available in more than 20 cities and large towns, and BT has committed to expanding coverage to a further 25 towns by the end of 2019.
Revenues at BT’s Enterprise division fell 5% to £3bn, driving adjusted EBITDA of £968m, slipping 3% on an annual basis. Openreach revenues were broadly flat on an annual basis at £2.5bn, though its EBITDA fell back 4% compared with the first half of 2018 to £1.4bn.
Summing up its performance in the first half of the year, BT said that it was continuing to execute against its three strategic pillars even though it was facing challenging market conditions which persist in the UK, in which customers were “paying less for telecoms connectivity whilst consuming exponentially more data.”
BT’s chief executive Philip Jansen said: “BT delivered results in line with our expectations for the second quarter and first half of the year, and we remain on track to meet our outlook for the full year.”
For the full-year outlook, BT expects no change to the final 2019/20 figures from that published on 3 July 2019, namely adjusted EBITDA in the range of £7.9bn to £8bn.
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