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BT posts solid numbers ahead of EE acquisition

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© BT

UK telco BT has this morning published its full year and fourth quarter results, which show a steady, if not spectacular, performance. Revenue was down 2 per cent for the year to £17.85m (although underlying revenue was flat) with ebitda up 3 per cent to £6.27m. The Q4 percentages were broadly in line with annual trends.

BT Global Services remains the largest single revenue contributor, with 38 per cent of total group revenues, but it saw it sales fall by 7 per cent during the year. In fact, the only business unit to report growth was Consumer, up a corresponding 7 per cent to now account for 24 per cent of group sales. The Consumer unit also dramatically improved its margins, with ebitda up 24 per cent.

“It’s been a ground-breaking year for BT, in which we’ve made some key decisions and announced some major investments to underpin the future growth of the business,” said BT CEO Gavin Patterson. “Shareholders approved our proposed £12.5 billion acquisition of EE last week.”

Whilst BT is dabbling in mobile at the moment, it is obviously not going to do anything that will conflict with EE’s business, despite still needing to secure regulatory approval for the deal. It’s in the fixed broadband market that BT needs to demonstrate its continued leadership.

“Our superfast broadband network now passes more than three-quarters of the UK and we’ve announced plans to upgrade to ultrafast,” added Patterson. “This will be another multi-year investment by Openreach and is the right thing for both BT and the UK, providing even faster speeds in an already competitive market.”

BT said it recorded 266,000 retail net additions for “superfast fibre broadband” in Q4, taking its total customer base to 3 million. It’s much-criticised Openreach unit added 455,000 fibre (aka, BT speak for FTTC and some FTTP) connections in the quarter, of which 42 per cent were made on behalf of competing service providers. The number of homes and businesses connected is now 4.2 million, representing 19 per cent of premises passed by FTTC and FTTP and an increase of 50 per cent on a year ago.

UK superfast coverage

BT added that it “continues to make progress with extending the reach of superfast fibre broadband beyond our commercial footprint, as part of the BDUK programme” and that its superfast broadband network is available to more than 22m premises, which is over three-quarters of the UK.

The Broadband Delivery UK (BDUK) programme is also somewhat controversial, in terms of how it is structured. BT received a grant of £117 million during the fourth quarter from the UK government towards the BDUK programme, which was up from £59 million a year ago. The amount received for the whole year was £392 million

The first phase of the BDUK programme calls for superfast broadband coverage (i.e. 24Mbit/s or more) to 90 per cent of the population by 2016, with a minimum 2Mbit/s guaranteed to the remaining 10 per cent. Funding for the first phase was set at £530 million, and is supposed to be matched by local government authorities. It’s a complex three-phase scheme that has been subject to several oversight reports from the Public Accounts Committee and National Audit Office. Is the scheme on target? Did BT over-price its grant application cost estimates? Why did BT win all the contracts? And so on. Hopefully, these questions will all get answered and the UK will benefit from a high performance, fairly priced, and competitive broadband network.

Looking forward to this coming year, BT’s much-anticipated 500Mbit/s G.fast trials are due to begin in a few months, and the EE deal should near completion. Speaking of which, BT reported that it has already spent £19 million on acquisition costs, plus a further £7 million on related financing costs.

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