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BT reports solid growth despite weak pound

The collapse in the value of the pound following the EU referendum has not dented BT’s confidence, with strong growth reported across multiple business units

New broadband and mobile customers once again helped deliver solid growth in revenues and pre-tax profits at BT in the second quarter of its financial year, although the weakening pound in the wake of the UK’s vote to leave the European Union (EU) has had some impact.

BT said it did not expect the result of the EU referendum to have a significant impact on its outlook, which remained unchanged – even though the future nature of the UK’s trading relationship with Europe and the rest of the world remains uncertain. It said it would continue to monitor the longer-term impact of the Brexit decision.

BT’s group-wide sales of £6.6bn were up 35% year-on-year, while pre-tax profit rose 5% to £671m during the three months to the end of September 2016. CEO Gavin Patterson hailed the results as “positive”.

“We have made good progress on the integration of EE and the delivery of our synergy targets,” said Patterson. “Our consumer-facing lines of business have performed well, but in the enterprise space, the UK public sector continues to be a challenging market.

“Across the group, we continue to drive cost reduction and productivity improvements. Customer experience remains a key priority, and we are stepping up our investments in the second half of the year. And we will continue to invest in our ultrafast and 4G plans in 2017 and beyond.”

Revenues at BT’s Consumer business grew 11% to £1.25bn with a 17% increase in broadband and TV revenue, and a 7% rise in call and line revenue – although this was largely due to the timing of price changes during the quarter.

BT added 76,000 retail broadband customers, representing about 65% of the total net digital subscriber line (DSL) and fibre-based market additions for the period.

Growth on its superfast fibre-to-the-cabinet (FTTC) products was better still, with 216,000 retail net additions, taking its customer base to 4.5 million. BT said this meant that 49% of its broadband customers were now on fibre connections, although it should be noted that most of these customers are receiving an FTTC broadband connection, which relies on copper lines to bridge the last mile and is therefore substantially slower than true fibre-to-the-premises (FTTP).

EE, meanwhile, booked revenues of £1.28m, and although this was down 19% on the equivalent quarter last year, before its acquisition by BT, growth of 280,000 in contract mobile customers and improvement in the reach and take-up of its 4G network gave little cause for concern.

Revenues at BT’s Business and Public Sector unit grew by 15%, but much of this growth was down to the EE SME and corporate customers that BT has taken under its wing in the past few months. Public sector and major business sales were down 10%, and the inclusion of EE revenues was more than offset by the decline in public sector, which BT said it expected to remain challenging for the rest of the year and into 2017.

Turning to its other units, BT Global Services grew revenues by 16% to £1.4bn, with foreign exchange movements following the EU referendum proving particularly beneficial. Wholesale and Ventures was down 9% to £522m, and sales at Openreach were flat at £1.27bn, thanks to Ofcom-imposed price cuts earlier this year.

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