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Despite seeing its financial performance hit hard by the Covid-19 pandemic in the year to March 2021, incumbent UK telco BT has come out swinging and is bullishly predicting better times ahead in infrastructure. As such, it is increasing and accelerating its fibre-to-the-premises (FTTP) roll-out target from 20 million to 25 million homes and businesses by December 2026.
For the year ended 31 March 2021, BT reported total revenue of £21.33bn, down 7% on an annual basis. The fall was primarily due to the impact of Covid-19 on consumer business, as well as a reduction in business activity in enterprise units. The decline in revenue was also driven by ongoing legacy product declines and divestments in its enterprise businesses but was partly offset by higher equipment revenue and higher rental bases of fibre-enabled products and Ethernet in the Openreach broadband provision division.
Adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) were £7.4bn, down by 6% compared with the year to 31 March 2020, just as the UK’s first lockdown was kicking in. Reported profit before tax was £1.8bn, down 23% on the figure reported a year ago, primarily due to the reduced earnings.
The Ebitda fall was attributed primarily to the lower revenues, special frontline bonus, increased service costs, and continued investment in copper-to-fibre migrations and the company’s FTTP base. These were partly offset by sports rights rebates and cost savings, including BT’s modernisation programme, in what it called “tight” cost control and Covid-19 mitigation actions. BT’s capital expenditure grew by 6% year-on-year to £4.22bn, primarily due to increased network and equipment investment.
Philip Jansen, BT
Yet despite the losses, BT chief executive Philip Jansen said it would look to build back better from the pandemic and had come out of a “challenging” year as a stronger business with “an even greater sense of purpose”. The company would be pivoting to consistent and predictable growth, he added, and spurred on by the UK regulator Ofcom’s Wholesale Fixed Telecoms Market Review and the recently announced 5G spectrum auction, it would be increasing and accelerating its FTTP roll-out target from 20 million to 25 million homes and businesses by December 2026.
BT said this plan would see Openreach ramp up its build to four million premises a year, with immediate effect. BT stressed that it had the capacity to fund the additional build entirely from internal resources while continuing to stand by its other priorities, including investing in 5G and its ongoing modernisation programme. BT believes it can deliver further shareholder value by funding the additional five million premises through a joint venture with external parties and will explore joint venture structures over the first half of the current financial year.
“BT is already building more full-fibre broadband to homes and businesses than anyone else in the UK,” Jansen added. “Increasing our FTTP target from 20 million to 25 million homes has three massive benefits: it allows us to go faster, beefing up our capacity to build fibre to households and businesses; it allows us to go further, getting fibre to more people including in rural communities; and it will help fuel UK economic recovery, with better connectivity and up to 7,000 new jobs.”
Openreach CEO Clive Selley said: “We’re proud that BT Group is increasing its ambition for Openreach. We’ve already proven that we can build ultrafast and ultra-reliable full-fibre broadband to millions of homes and businesses at pace, and without compromising on quality. We’re also encouraged by the demand we’re seeing – having just connected our one-millionth customer.
“Research shows how full-fibre broadband can make us more productive, competitive and green as a nation, and it can enable a million people to return to the workforce, helping to level up the UK. So, we believe the time is right to capitalise on that potential and, having made this technology available to 4.6 million premises already, we expect to reach a peak build rate of four million premises a year.”
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