• 7 May 2020

    Highlights:

    • 2019/20 results overall in line with expectations
    • New FTTP target to reach 20m premises by mid- to late-2020s, on the assumption we obtain the required critical enablers
    • Phase 1 of our transformation programme complete; next phase of modernisation to deliver annualised gross benefits of £1bn by March 2023 and £2bn by March 2025, with £1.3bn one-off cost to achieve in total across the five years
    • Keeping the nation connected during the Covid-19 crisis
    • Final dividend suspended for 2019/20 and all dividends for 2020/21 to create capacity for value-enhancing investments and managing confidently through the Covid-19 crisis; expect to resume dividends in 2021/22 at an annual rate of 7.7 pence per share  

    Keeping the nation connected during the Covid-19 crisis:

    • Our priority is protecting our people, in particular our frontline keyworkers who have continued to work to keep the nation connected
    • Our networks are performing well, and comfortably within capacity, despite the change in demand patterns
    • We have supported the national response to the crisis, including providing connectivity to the NHS Nightingale hospitals and are working closely with Government on a wide range of initiatives

    Operational:

    • FTTP rollout at c.32k premises passed per week; FTTP premises passed to date doubled in the year to 2.6m
    • Divested Tikit and progressing disposals of selected domestic operations in Latin America and France
    • 5G now live in 80 cities and large towns; investing significantly to more than double current footprint by March 2021 subject to the right conditions
    • EE named best overall operator in RootMetrics' biannual awards
    • Consumer fixed ARPC £38.1, down 2% year on year; postpaid mobile ARPC £20.4, down 2% year on year due to impact of regulation and continued trend towards SIM-only; RGUs per address 2.38
    • Postpaid mobile churn improved to 1.1% quarter on quarter; fixed churn improved to 1.3% year on year due to improvements to customer experience and shift to fairer, predictable and competitive pricing strategy 

    Financial:

    • Reported revenue £22,905m down 2%mainly reflecting the impact of regulation, declines in legacy products, strategic reductions in low margin business and divestments
    • Reported profit before tax £2,353m down year on year; includes charges of £95m as a result of Covid-19 mainly reflecting increased debtor provisions
    • Adjusted2 EBITDA £7,907m, down 3%1, due to lower revenue and investment in customer experience, partly offset by cost savings from transformation programmes 
    • Net cash inflow from operating activities £6,271m, up 47%, due to lower pension contributions and one-off cash flows; normalised free cash flow2 £2,011m, down 18%, primarily due to increased cash capital expenditure
    • Capital expenditure £3,960m, up £193m excluding BDUK funding deferral, driven by network and customer investment
    • Net debt2 increased primarily due to implementation of IFRS 16, and net business cash outflows 
    • Given the uncertainty created by Covid-19 we will not be providing a financial outlook statement for 2020/21 
    1 Changes on prior year are presented on an IAS 17 basis where meaningful except for adjusted EBITDA, which is presented on an IFRS 16 pro forma basis
    2 See Glossary 

     

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

    "BT had a positive year delivering results in line with expectations and completing our £1.6bn phase 1 transformation programme, one year ahead of schedule.

    "Covid-19 has changed everybody’s world and I am immensely proud of how BT has responded to the challenges the Covid-19 crisis has presented. Our strong and resilient networks, both fixed and mobile, have proved critical to the continuing functioning of the UK economy, providing unrivalled connectivity and services for the nation.

    "Of course, Covid-19 is affecting our business, but the full impact will only become clearer as the economic consequences unfold over the next 12 months. Due to Covid-19, BT is not providing guidance for 2020/21, at this time.

    "BT has the best network infrastructure in the UK. We have the leading 4G network and are rapidly expanding our leadership position in 5G, that today covers over 80 towns and cities. We have the largest and most extensive fixed network and are leading the UK on the next generation Fibre-to-the-Premises (FTTP) network where we now pass 2.6 million premises. Today we are announcing a rapid acceleration of our FTTP build with a target of 20 million premises passed by the mid- to late-2020s, including a significant build in rural areas. After passing 1.3 million premises last year, we are aiming at over 2 million in 2020/21, and envisage a maximum build rate of 3 million premises per year. Our FTTP investment should deliver pre-tax nominal returns of between 10% to 12% and is based on a regulatory framework consistent with Ofcom’s preferred policy direction and continued support for infrastructure investment and competition.

    "The continued delivery of market leading customer experiences remains core to our success, with a focus on driving the take-up of converged product offerings such as Halo, our premium converged offering for homes and businesses. In the short period since launch, Halo now represents over 30% of our BT consumer broadband base.

    "BT is delivering, but is also changing. BT needs to be leaner, simpler and more agile. Today we are announcing a radical modernisation and simplification programme that will use technology to create a better BT for the future. This 5-year initiative will re-engineer old and out of date processes, rationalise products, reduce re-work and switch off many legacy services. This next stage in the modernisation of BT will deliver gross annualised savings of £2 billion over the next 5 years.

    "In order to deal with the potential consequences of Covid-19, allow us to invest in FTTP and 5G, and to fund the major 5-year modernisation programme, we have also taken the difficult decision to suspend the dividend until 2022 and re-base thereafter.

    "These decisions, particularly on the dividend, network investment and transformation are key to underpinning BT’s investment case; driving network strength, competitive strength and financial strength, providing more clarity to the market, and driving long-term value for shareholders. I am confident that these decisions position us really positively for the future."

    Jan du Plessis, Chairman, commenting on the dividend, said

    "Recognising the importance of dividends to our shareholders, the Board’s decision in relation to the dividend has been exceptionally difficult. BT plays a key role in sustaining critical national infrastructure – as magnified by the Covid-19 crisis – and many stakeholders trust and rely on the connectivity we provide. BT also stands ready to make the biggest communications infrastructure investment in the UK in a generation – that includes building our full fibre network to 20m premises by the mid- to late-2020s. To maintain such trust, whilst creating capacity for value-enhancing investment and navigating the unprecedented uncertainties caused by Covid-19 without compromising our credit rating, the Board concluded that the prudent and proper decision was to suspend the 2019/20 final dividend and all dividends for 2020/21, and re-base future dividends to a more sustainable level. The Board believes that this decision is in the best long-term interests of shareholders.

    "We expect to resume dividend payments in 2021/22, rebased to 7.7p per share. The Board expects to continue with a progressive dividend policy from this re-based level for future years."  

    KPIs

    Slides

  •  30 January 2020

    Key strategic developments - continued delivery in line with strategy:

    • Ofcom's consultation on the Wholesale Fixed Telecoms Market Review is an important step forward in incentivising investment in the UK's digital infrastructure and toward enabling BT to significantly increase its FTTP target
    • Exclusive rights to UEFA Champions League, UEFA Europa League and UEFA Europa Conference League secured until 2024
    • On-shoring of BT brand sales and service calls completed; nearly 500 retail stores now BT/EE dual branded
    • Our Better Workplace programme confirmed further long-term locations in Birmingham and Bristol
    • Sale agreed of our domestic operations in Spain
    • Important clarification on use of certain vendors in 5G and full fibre networks estimated impact of c.£500m over 5 years

    Operational:

    • 5G now live in over 50 locations; EE found to have broadest 5G network by RootMetrics
    • Openreach accelerates FTTP build at c.26k premises passed per week; 2.2m FTTP premises passed to date
    • Openreach awarded two of three lots to provide superfast speeds to Scotland; vast majority of build to be FTTP
    • Consumer fixed ARPC £38.2, down 4% year on year due to decline in voice revenue; postpaid mobile ARPC £20.3, down 5% due to impact of regulation and continued trend towards SIM-only; RGUs per address 2.38
    • Postpaid mobile churn remains low at 1.3% in Q3 despite impact of auto switching; fixed churn at 1.3% in Q3 down from 1.4% in prior year following customer experience improvements and new pricing strategy

    Financial:

    • Reported revenue £17,246m and adjusted2 revenue £17,192m, both down 2%1 primarily due to ongoing headwinds from regulation, competition and legacy product declines
    • Reported profit before tax of £1,911m; adjusted2 EBITDA £5,900m, down 3%1, due to the fall in revenue, higher spectrum fees, investment in customer experience and higher operating costs in Openreach
    • Normalised free cash flow2 of £1,000m, down 42% due to increased cash capital expenditure, deposit for UEFA club football rights, higher interest and tax payments and working capital, partially offset by one-off cash flows
    • Capital expenditure £2,877m. Up £251m excluding BDUK funding deferral, driven by fixed and mobile network investment
    • Overall financial outlook maintained; we expect normalised free cash flow2, for timing reasons, to be in lower half of the £1.9bn - £2.1bn full year guidance range 
    1 Changes on prior year are presented on an IAS 17 basis where meaningful except for adjusted EBITDA, which is presented on an IFRS 16 pro forma basis
    2 See Glossary on page 5 

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

    “BT delivered results slightly below our expectations for the third quarter of the year, but we remain on track to meet our outlook for the full year.

    “We continue to invest in the business. During the quarter we launched Halo, the UK’s ultimate converged plan, which will give homes and businesses the best connection and service. We’ve continued to use our national scale and local presence across the UK to provide customers with the best possible experience, for example by meeting our promise to answer all customer calls in the UK and Ireland and bringing BT sales and service back to the high street in nearly 500 BT/EE stores.

    “Underpinning the ongoing development of market-leading propositions, we continue to invest in the best converged network. We welcomed the direction of Ofcom’s recent consultation, which is an important step forward towards a widely-shared ambition to invest in fibre across the whole of the UK. We’re also investing in 5G, making it available in over 50 locations, with the first customers enjoying a great experience.

    "The security of our network is paramount for BT. We therefore welcome and are supportive of the clarity provided by Government around the use of certain vendors in networks across the UK and agree that the priority should be the security of the UK’s communications infrastructure. We are in the process of reviewing the guidance in detail to determine the full impact on our plans and at this time estimate an impact of around £500 million over the next 5 years.

    “I’m really excited about the long-term prospects for this great company and I‘m confident our plans will enable us to be bolder, smarter, and faster to ensure that we remain successful and create a better BT for the future.”

  • 31 October 2019

    Key strategic developments:

    • Launched a host of new products for consumer and business segments, including the new Halo converged product plans and BT Mobile 5G
    • Introduced a range of new service initiatives including bringing the BT brand to the high street in over 600 EE/BT dual-branded stores, and 100% UK & Ireland call centres by January 2020
    • Continued to make progress on the BT modernisation agenda, including delivering over £1.1bn transformation benefits, announcing the first locations in our Better Workplace Programme, and disposal of BT Fleet Solutions
    • Outlined our Skills for Tomorrow programme to provide digital skills training for 10m UK children, families and businesses

    Operational:

    • 5G network live in over 20 cities and large towns; 5G smartphone plans now available on both EE and BT brands
    • Openreach announced the launch of new FTTP 1Gbps and 550Mbps products. FTTP rollout at c.23k premises passed per week; 4.2m ultrafast (FTTP and Gfast) premises passed to date; currently announced plans to build FTTP in 103 locations
    • Consumer fixed ARPC £38.5, broadly flat year on year; postpaid mobile ARPC £20.8, down 5.5% year on year due to impact of regulation and continued trend towards SIM-only; RGUs per address up to 2.38
    • Postpaid mobile churn remains low at 1.2% in Q2 despite impact of auto switching; fixed churn at 1.3% in Q2 down from 1.6% in prior year

    Financial:

    • Reported revenue £11,467m, down 1%1 mainly reflecting the impact of regulation, declines in legacy products, and strategically reducing low margin business
    • Reported profit before tax £1,333m, broadly flat year on year; adjusted2 EBITDA £3,923m, down 3%1 due to lower revenues, increased spectrum fees, content costs and investment to improve competitive positioning partly offset by cost savings from transformation programmes
    • Net cash inflow from operating activities of £2,173m; normalised free cash flow2 of £604m, down 38% due to increased capital expenditure, higher interest and tax payments, partially offset by one-off cash flows
    • Capital expenditure £1,882m. Up £225m excluding BDUK grant funding deferral, driven by increased network investment
    • Net debt2 increased primarily due to implementation of IFRS 16, £6.1bn, and net business cash flows, £1.2bn
    • Interim dividend of 4.62p per share; 30% of last year's full-year dividend of 15.4p per share
    • Overall financial outlook maintained
    1 Changes on prior year are presented on an IAS 17 basis where meaningful except for adjusted EBITDA, which is presented on an IFRS 16 pro forma basis
    2 See Glossary on page 2

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

    “BT delivered results in line with our expectations for the second quarter and first half of the year, and we remain on track to meet our outlook for the full year.

    “We’ve invested to strengthen our competitive position. We’ve accelerated our 5G and FTTP rollouts, introduced an enhanced range of product and service initiatives for both consumer and business segments, and announced price and technology commitments to deliver fair, predictable and competitive pricing for customers.

    “Openreach is significantly accelerating its pace of FTTP build and is now passing a home or business every 26 seconds. Openreach announced a further 29 locations in its build plan to reach 4m premises by March 2021, and we continue to make positive progress with Government and Ofcom on the enablers to stimulate further investment in full fibre.

    “We continue to make progress on the BT modernisation agenda, delivering over £1.1bn in annualised cost savings, and announcing locations in our Better Workplace Programme.”

  •  2 August 2019

    Key strategic developments for the quarter

    • EE successfully launched the UK’s first 5G mobile network in six cities
    • BT named the UK’s major broadband universal service obligation provider by Ofcom
    • 12 successive quarters of improvement in Group NPS1, up 0.3 points
    • Openreach announced updated pricing for wholesale FTTP broadband and the next 36 locations in its FTTP rollout
    • BT welcomes the Government’s ambition for full fibre broadband across the country and is ready to play its part to accelerate the pace of rollout
    • Sale of BT Centre agreed for £210m and lease signed for new headquarters in Aldgate, London

    Operational:

    • Openreach continues FTTP rollout at c.20k premises passed per week with 267k premises passed in the quarter; 3.7m ultrafast (FTTP and Gfast) premises passed to date
    • Consumer fixed ARPC £37.9 flat year on year; postpaid mobile ARPC £20.7, down 4.6% on Q1 2018/19 due to the impact of regulation and lower RPI price increases
    • Fixed churn down to 1.3% following customer experience improvements; postpaid mobile churn remains at 1.1%
    • EE first in 15 out of 16 RootMetrics tests for mobile network performance

    Financial:

    • Reported and adjusted1 revenue of £5,633m down 1% with decreases in Consumer, Enterprise and Global
    • Adjusted EBITDA1 down 1%2 at £1,958m driven by lower revenues and higher spectrum fees and content costs, partly offset by reduction in costs from restructuring and transformation programmes
    • Reported profit before tax of £642m and adjusted1 profit before tax of £749m, impacted by the higher upfront interest expense on the IFRS 16 lease liabilities recognised from 1 April 2019
    • Normalised free cash flow1 of £323m down 36% reflecting increased capital expenditure and higher interest and tax payments, partially offset by working capital phasing
    • Reported capital expenditure of £931m up 11% primarily due to network investment and customer driven costs
    • Full year outlook maintained

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

    “BT delivered results in line with our expectations for the quarter, with adjusted EBITDA declines in Consumer and Enterprise partly offset by growth in Global. We are on track to meet our outlook for the full year.

    “We made good progress during the quarter, including launching the UK’s first 5G network, delivering an improvement to our group net promoter score for the twelfth consecutive quarter, announcing the first nine cities in our consolidated office footprint, and being named the major broadband universal service obligation provider for the UK.

    “In building a better BT for the future we need to be even more competitive. We will continue to take decisive action, including on price, to further strengthen our customer propositions and market position, both to respond to any short-term market pressures and to capitalise on longer-term opportunities.

    “On network investment, we welcome the Government’s ambition for full fibre broadband across the country and we are confident we will see further steps to stimulate investment. We are ready to play our part to accelerate the pace of rollout, in a manner that will benefit both the country and our shareholders, and we are engaging with the Government and Ofcom on this.”

  •  3 July 2019

  •  25 June 2019