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BT Group's first-quarter results buoyed by superfast broadband and mobile demand

BT Group's first-quarter results highlight successes in superfast broadband and mobile divisions, but analyst warns of challenging times to come

Group-wide sales at BT were down by 2% at £4.2bn during the first quarter of 2015, with the firm’s global services division feeling the pinch from a downturn in public sector demand.

The company said group earnings were up by 1% overall to £1.4bn in Q1, thanks to a 20% uptick in demand for its fibre broadband services, which are now accessible to 80% of the population.

Its decision to re-enter the consumer mobile market was also flagged as a high point in the resulting, with the company claiming to have signed up more than 100,000 new customers during the three months to 30 June.

BT Group CEO Gavin Patterson said investing in its superfast broadband network remains a top priority for the firm, as it pushes on with its bid to provide fibre-based services to 95% of the country by the end of 2017.

“Our technical trials of ultrafast broadband using G.fast are progressing well; we’re on target to start large-scale customer trials this summer,” he added.  

“We’re also looking forward to completing our acquisition of EE, which will allow us to create a true UK digital champion, providing customers with greater choice and value and helping to deliver the UK’s connected future.”   

On the superfast broadband front, the government has confirmed that BT will hand back £129m to the Broadband Delivery UK (BDUK) fund after adoption of its superfast services turned out to be better than expected within a number of local authorities.  

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  • BT is to pay back £129m of the money it received from local authorities to roll out superfast broadband, as a result of exceeding targets for take-up of the services

According to the line of business breakdown of the company’s results, BT Global Services chalked up a 6% year-on-year decline in revenue to £1.5bn, and an 11% fall in earnings to £190m over the same time period.

The division has been involved in a number of new ventures during the first quarter of 2015, including the launch of BT’s Cloud Management System, which offers users access to catalogue of cloud services from the likes of Amazon, Cisco and Microsoft.   

Even so, the business unit has suffered as a result of a downturn in demand for BT’s services in the public sector, according to analyst firm Raymond James, despite reporting an increase in orders to the tune of around 14%.

BT Business, the arm responsible for providing enterprises with access to phone and broadband services, also enjoyed a flat quarter with revenue down 2%, as did BT Wholesale and Openreach.

In an analyst note, the company said BT’s Q1 performance is in line with expectations, but the company needs to be preparing for battle on a number of fronts in the future.

“BT will be facing an unprecedented string of competitive moves, with Sky and TalkTalk launching mobile, Vodafone launching broadband and VMED and TalkTalk expanding their fibre networks. We believe such factors may more than offset positives from BT’s cost-savings plan,” the note added.

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