REG - BT Group PLC - Trading Statement

BTAnnouncement

27/07/2023 07:15

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RNS Number : 3302H  BT Group PLC  27 July 2023

Trading update for the three months to 30 June 2023

BT Group plc - 27 July 2023

 Philip Jansen, Chief Executive, commenting on the results, said

 "We've made a strong start to the year, in what remains a very competitive
 market, with improved customer satisfaction, pro forma revenue growth in all
 of our business units and pro forma group EBITDA up by 5%. 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. 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."

 

Strong start to the year:

•   FTTP footprint expanded to 11m premises, 44% completion of 25m target,
with a further c.6.2m where initial build is underway; 718k premises passed in
the quarter at an average build rate of 55k per week

•   Customer demand in Openreach for FTTP increased with Q1 orders up 34%
year-on-year and net adds of 383k, bringing network take-up rate to 32%; total
FTTP connections grew to 3.5m

•   Openreach broadband ARPU grew by 10.2% year-on-year due to price rises
and increased volumes of FTTP; Openreach broadband base down 126k in Q1 due to
competitor losses combined with a weak broadband market and communications
providers ceasing copper lines; we continue to expect the Openreach broadband
base to decline by around 400k in FY24

•   Consumer broadband ARPU increased 5% year-on-year to £42.0 and
Consumer postpaid mobile ARPU increased 9% year-on-year to £19.7, both driven
by CPI-linked pricing; churn remains stable for broadband and postpaid mobile
at 1.1% and 1.0% respectively

•   Retail FTTP base grew year-on-year by 50% to 2.0m of which Consumer
1.9m and Business 0.1m; 5G base 9.2m, up 53% year-on-year

•   Business performance reflects positive momentum in SMB but declines in
CPS, Global and Wholesale due to higher input costs and legacy high-margin
managed contract declines

•   Continued focus on customer satisfaction and delivery of excellent
value for money with BT Group NPS of 23.7 up 1.8pts year-on-year

Continued pro forma revenue and EBITDA growth:

•   Pro forma adjusted(1) revenue £5.2bn, up 4% on Q1 FY23 due to
increased fibre-enabled product sales and  price increases in Openreach,
increased service revenue in Consumer with 2023 annual contractual price rises
being aided by higher FTTP base and higher roaming, and improved equipment
trading in Business, offset partially by legacy product declines; reported
revenue was up 1%

•   Pro forma adjusted(1) EBITDA £2.0bn, up 5% with revenue flow through
and cost control more than offsetting cost inflation; Business EBITDA decline
due to increased input costs and legacy high-margin managed contract declines

•   Reported profit before tax of £536m, up 11% primarily due to EBITDA
growth partially offset by specific items

•   Reconfirming all FY24 outlook metrics

 

                           Adjusted(1) revenue                                      Adjusted(1) EBITDA
 First quarter to 30 June  2023     2022 Pro forma(1) restated(1)  Change           2023     2022 Pro forma(1) restated(1)  Change
                           £m       £m                             %                £m       £m                             %
 Consumer                  2,423    2,348                                3          673      632                                  6
 Business                  2,027    1,967                                3          386      434                                  (11)
 Openreach                 1,526    1,417                                8          965      863                                  12
 Other                     5        7                                    (29)       9        16                                   (44)
 Intra-group items         (817)    (760)                                (8)        -        -                                    -
 Total                     5,164    4,979                                4          2,033    1,945                                5

 

 (1) See Glossary on page 2

Glossary

Our commentary focuses on the trading results on an adjusted pro forma basis.
Reported revenue and reported profit before tax are the equivalent unadjusted
or statutory measures and are reconciled in pages 233 to 235 of the Annual
Report 2023.

 Adjusted         Before specific items. Adjusted results are consistent with the way that
                  financial performance is measured by management and assist in providing an
                  additional analysis of the reporting trading results of the group.
 Adjusted EBITDA  Earnings before interest, tax, depreciation and amortisation, before specific
                  items, share of post tax profits/losses of associates and joint ventures and
                  net finance expense.
 Pro forma        Pro forma results estimate the impact on the group as if trading in relation
                  to BT Sport had been equity accounted for in Q1 FY23, akin to the BT Sport
                  joint venture being in place historically.

                  Please refer to the press release of 3 November 2022 for a bridge between
                  financial information on a reported basis and a Sports JV pro forma basis at
                  the half year to 30 September 2022.
 Restated         Results were restated in June 2023 to reflect:

                  i) the merger of our Global and Enterprise units to form Business; and

                  ii) the change in our methodology used to allocate shared Network, Digital and
                  support function costs across our units, reported within operating costs and
                  capex (to more closely align the recharges received by each unit to their
                  actual consumption).

                  Please refer to disclosures published for the formation of Business and
                  adjustments to central cost allocations on 27 June 2023.
 Specific items   Items that in management's judgement need to be disclosed separately by virtue
                  of their size, nature or incidence. In the current period these relate to
                  changes to our assessment of our provision for historical regulatory matters,
                  restructuring charges, divestment-related items and net interest expense on
                  pensions.

 

 

Enquiries

 Press office:        Tom Engel            Tel: 07947 711 959

                      Richard Farnsworth   Tel: 07734 776 317
 Investor relations:  Mark Lidiard         Tel: 0800 389 4909

 

We are scheduled to announce the second quarter and half year results for FY24
on 2 November 2023.

 

Forward-looking statements - caution advised

Certain information included in this announcement is forward looking and
involves risks, assumptions and uncertainties that could cause actual results
to differ materially from those expressed or implied by forward looking
statements. Forward looking statements cover all matters which are not
historical facts and include, without limitation, projections relating to
results of operations and financial conditions and the Company's plans and
objectives for future operations. Forward looking statements can be identified
by the use of forward looking terminology, including terms such as 'believes',
'estimates', 'anticipates', 'expects', 'forecasts', 'intends', 'plans',
'projects', 'goal', 'target', 'aim', 'may', 'will', 'would', 'could' or
'should' or, in each case, their negative or other variations or comparable
terminology. Forward looking statements in this announcement are not
guarantees of future performance. All forward looking statements in this
announcement are based upon information known to the Company on the date of
this announcement. Accordingly, no assurance can be given that any particular
expectation will be met and readers are cautioned not to place undue reliance
on forward looking statements, which speak only at their respective dates.
Additionally, forward looking statements regarding past trends or activities
should not be taken as a representation that such trends or activities will
continue in the future. Other than in accordance with its legal or regulatory
obligations (including under the UK Listing Rules and the Disclosure Guidance
and Transparency Rules of the Financial Conduct Authority), the Company
undertakes no obligation to publicly update or revise any forward looking
statement, whether as a result of new information, future events or otherwise.
Nothing in this announcement shall exclude any liability under applicable laws
that cannot be excluded in accordance with such laws.

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