Fibre growth drives revenue uptick but BT sees broadband losses in first quarter

BT posts first-quarter 2024 results vindicating strategy of focus on core networks and benefit of inflation-linked price rises, but broadband division sees overall fall in customers

As it announced that it would be prepping for the arrival of a new chief executive, the UK’s leading telco BT Group affirmed that it would continue its strategy of focusing on full-fibre broadband and 5G networks. The fruits of this have been revealed in the company’s results for the first quarter of fiscal 2024, even though they also revealed overall falls in broadband customers.

For the quarter ended 30 June 2023, BT reported pro forma adjusted revenue of £5.2bn, up 4% compared with the same period at the end of FY23. The key revenue engines were increased fibre-enabled product sales and price increases in its Openreach broadband provision division, increased service revenue in its consumer segment with 2023 annual contractual price rises being aided by a higher fibre-to-the-premises (FTTP) base and higher roaming, and improved equipment trading in the business segment offset partially by legacy product declines. Reported revenue was up 1% .

Pro forma adjusted EBITDA amounted to £2.0bn, up 5% year on year (YoY) with revenue flow through and cost control more than offsetting cost inflation. Business EBITDA declined due to increased input costs and legacy high-margin managed contract declines. This led to a reported profit before tax of £536m, up 11% primarily due to EBITDA growth partially offset by specific items.

Openreach broadband ARPU grew by 10.2% YoY due to price rises and increased volumes of FTTP while consumer broadband ARPU increased 5% YoY to £42, and consumer post-paid mobile ARPU increased 9% YoY to £19.7, both driven by CPI-linked pricing.

Among the highlights of the quarter cited by BT were the company expanding its FTTP footprint to 11 million UK premises – representing 44% completion of its plan to reach 25 million homes with full-fibre gigabit broadband by December 2026 – and with a further 6.2 million premises where initial build is underway.

In all, 718,000 premises were passed in the quarter at an average build rate of 55,000 per week. Customer demand in Openreach for FTTP increased with Q1 orders up 34% YoY and net adds of 383,000, bringing a network take-up rate to 32% while total FTTP connections grew to 3.5 million.

However, the total Openreach broadband base down was down 126,000 in Q1 due to competitor losses combined with a weak broadband market and communications providers ceasing copper lines.

BT expects the Openreach broadband base to decline by around 400,000 in FY24. Churn remained stable for broadband and post-paid mobile at 1.1% and 1.0% respectively. BT’s Retail FTTP base grew YoY by 50% to 2.0 million, of which consumer 1.9 million and business 0.1 million; 5G base 9.2 million, up 53% on an annual basis.

As it published the Q1 24 results, BT said that it was reconfirming all FY24 outlook metrics. Commenting on the quarter, Jansen said the company had made a strong start to the year, in what remains a very competitive market.

“Openreach is now 44% of the way through its full fibre build, and customer demand has continued to grow with a total network take-up rate of 32%. Consumer is seeing solid pro forma growth driven by pricing and mix, as customers choose higher performance connections; and business grew its order book, driving revenue growth for the combined unit,” he said.

“We continue to drive transformation across the group, and while there remains much to do it’s clear that our strategy is working, and BT Group is set up for success.”

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