• 31 July 2020

    Key strategic developments:

    • BT delivered a strong operating performance and remains committed to supporting our customers and colleagues. Financial results impacted by Covid-19
    • Openreach committed to build FTTP to 3.2m premises in rural areas by 2025/26, subject to enablers including extension of indexation across the whole country. Continued progress towards 20m FTTP target
    • Openreach to stop selling copper products to c.1.2m FTTP-enabled premises in 117 exchange areas from June 2021
    • Further work required to comply with additional restrictions on the use of Huawei equipment but no anticipated impact on coverage or rollout of 5G and full fibre; cost expected to be absorbed within previously reported estimate of £500m
    • Enterprise launched major new scheme to support small businesses in being better positioned for growth following Covid-19
    • 16 successive quarters of improvement in Group NPS1
    • Rob Shuter appointed CEO of Enterprise unit; Gerry McQuade to retire from BT

    Operational:

    • Openreach continues FTTP rollout with 3m FTTP premises now passed; on track to achieve 4.5m by March 2021
    • Consumer fixed ARPC £36.4, down 4% year on year due to continued market competition and residential BT Sport revenue decline; postpaid mobile ARPC £19.6, down 5% due to decline in roaming and out of bundle revenues, and continued trend towards SIM-only; RGUs per address 2.41
    • Postpaid mobile and fixed churn both down to 1% in Q1 due to low market activity during lockdown

    Financial:

    • Revenue £5,248m, down 7% primarily due to the impact of Covid-19, including reduced BT Sport revenue and a reduction in business activity in our enterprise units
    • Adjusted1 EBITDA £1,813m, down 7%, driven by the fall in revenue and continued investment in customer experience, partly offset by Covid-19 mitigating actions and savings from our transformation programmes
    • Reported profit before tax £561m, down 13%, due to reduced EBITDA, higher interest expense, and higher depreciation and amortisation charges; partly offset by the gain on disposal of our Spanish operations
    • Negative Q1 normalised free cash flow1 reflects Covid-19 pressures on EBITDA combined with the usual Q1 pressures on working capital due to the timing of public sector collections, capex creditors and payment of management bonus. Normalised free cash flow1 declined by £372m to an outflow of £(49)m driven by Covid-19 impacts on EBITDA and extended customer payment terms, as well as some one-off cash flows which benefited the prior year including the upfront cash payment received from Cellnex
    • Capital expenditure broadly flat at £927m, with higher network investment offset by lower customer and non-network infrastructure spend
    • Outlook for 2020/21: adjusted1 revenue down 5% - 6%; adjusted1 EBITDA £7.2bn - £7.5bn; reported capital expenditure £4.0bn - £4.3bn; normalised free cash flow1£1.2bn - £1.5bn
    1 See Glossary on page 5

     

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

    "Despite Covid-19, BT delivered a strong operating performance in the first quarter and delivered a relatively resilient set of financial results. We continue to invest in the long-term future of the business. We continued to support our customers and colleagues through the crisis, including offering NHS workers on EE unlimited mobile data, and discounts for pubs and clubs on BT Sport until the end of the year. During the quarter Openreach resumed provisioning and repair activity in customer premises, we re-opened the majority of our retail stores, and we saw the restart of the Premier League on BT Sport. Enterprise has today launched the BT Small Business Support Scheme, which will boost cash flow, connectivity and confidence among this critical segment of the economy over the coming months.

    "Throughout this crisis we remain focussed on delivering against our strategic goals to deliver long-term value for shareholders. We reached an important milestone with 3m FTTP premises now passed, welcomed Ofcom’s consultation on our rural FTTP build proposal, and have now deployed 5G to 100 towns and cities. Together with continued improvements in customer experience and our modernisation programme, we are positively positioned for the future.

    "Although uncertainties remain, we are now able to provide an outlook for this financial year. Despite our strong operational performance in the first three months of the year, it is clear that Covid-19 will continue to impact our business as the full economic consequences unfold. Beyond this year and based on current expectations, we expect to return the business to sustainable adjusted EBITDA growth, driven in part by the recovery from Covid-19."

    Slides

  • 7 July 2020

  • 29 June 2020