• BT Group returns to revenue growth in the three months to June
• Service price rises and increased fibre connections contribute to its performance
• The results were partially offset by poor performance mainly in its Enterprise unit
• BT still faces significant pressure from staff strikes and criticism over pricing hikes

UK-based operator BT returned to revenue growth in its fiscal first quarter, driven by increased fibre connections and higher tariffs, but the telecoms group keeps facing challenges both internally and externally over its pricing and pay policy.

In the three months to 30 June, BT’s revenue rose 1% to £5.1bn as a result of “improved pricing and trading” in its Consumer and Openreach divisions. Earlier this year, the company announced an average price hike of 9.3% for consumer broadband and phone line services – a highly criticised move that the company justified with inflation.

Both its Consumer and Openreach businesses grew by 5% in the quarter to £2.5bn and £1.4bn, respectively, and a driving force was its increased fibre broadband signups.

“We’re building our full fibre broadband network faster than ever and we’re seeing record customer connections – both ahead of our own expectations. Openreach’s full fibre network now reaches more than 8 million homes and businesses across the UK, and we anticipate increasing our annual build from 2.6 million premises last year to around 3.5 million this year”, commented BT Group CEO Philip Jansen.

However, this positive was offset by declining revenue in BT’s Enterprise and Global units which fell by 7% and 1% to £1.2bn and £774m, respectively. The company explained the drop was due to “challenging market conditions impacting large corporate customers” in both segments.

In May, BT Enterprise’s CEO, Rob Shuter, argued that the unit “has great potential to meet the real-world needs of modern UK businesses” through blending strategic focus and investment, better customer experience, service innovation, hard work and a new slogan: BT Means Business – see BT presses reset on its Enterprise pitch.

Overall, Jansen maintained that the company “has made a good start to the year; we’re accelerating our network investments and performing well operationally”.

The telco also highlighted growth in 5G connections, stating that its mobile division EE now covers more than 55% of the UK’s population with the next-generation network. It also highlighted high customer satisfaction in the period, continuing a trend discovered by UK regulator Ofcom for the first three months of 2022.

“The modernisation of BT Group remains on track. We are delivering and, notwithstanding the current economic uncertainty, we remain confident in our outlook for this financial year,” added BT’s chief.

Storm clouds gathering

While the company remains bullish about its performance for the financial year (ending in March 2023) and has no plans to change its outlook for revenue growth, pressure over the telco in the future is mounting over the company’s leadership.

Equity research firm Jefferies cautioned that the promise of recovery in BT’s Enterprise unit in the second half of this year “without greater clarity on the plan, and management’s ability to deliver this against the weak economic backdrop, leaves investors lacking adequate visibility at this stage”.

Adding to its woes in the business offerings segment, two employee strikes are set to occur tomorrow (29 July) and on Monday (1 August) over demands for pay rises to cover what is dubbed the cost of living crisis in the UK, resulting in costs of goods and services rising faster than income. As many as 40,000 BT workers are said to take part in the walkout, according to the trade union, the Communications Workers Union (CWU), which represents them. The strike will occur despite the fact that BT retreated in April by announcing a £1,500 consolidated pay increase for all frontline workers across its brands – see BT Group to award highest pay rise to frontline workers in over 20 years. Today, Jansen appears to have closed the door to further negotiation, claiming that the offered compensation was “history”, the Financial Times reported.

While a part of its current staff is expressing discontent with the proposed terms, the group recently turned its head to look for new software-focused talent in the UK and India – see BT joins Vodafone in hunt for software talent.

- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV