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(Alliance News) - BT Group PLC on Thursday reported an annual profit climb and has agreed to a sports broadcasting joint-venture alongside Warner Bros Discovery Inc, after entering talks three months ago.
BT shares were 2.8% higher at 181.43 pence each in London on Thursday morning, the best large-cap performer.
In addition, it also reported its Openreach broadband infrastructure arm "continues to build like fury". The FTSE 100-listed telecommunications operator backed its yearly guidance but noted a tough economic outlook.
In the year ended March 31, revenue declined 2.3% to GBP20.85 billion from GBP21.33 billion. Pretax profit, however, rose 8.8% to GBP1.96 billion from GBP1.80 billion. Operating costs were 4.2% lower at GBP17.97 billion.
Adjusted revenue was also GBP20.85 billion, though down 2.5% from GBP21.37 billion. The figure fell just short of company-compiled consensus of GBP20.88 billion.
BT noted revenue growth from its Openreach business was offset by a fall in Enterprise and Global, while Consumer - its biggest unit - was flat.
BT's adjusted earnings before interest, tax, depreciation and amortisation rose 2.2% to GBP7.58 billion. The figure landed in line with BT's GBP7.5 billion to GBP7.7 billion guidance range.
"BT Group has again delivered a strong operational performance thanks to the efforts of our colleagues across the business. Openreach continues to build like fury, having now passed 7.2 million premises with 1.8 million connections; a strong and growing early take-up rate of 25%. Meanwhile, our 5G network now covers more than 50% of the UK population. We have the best networks in the UK and we're continuing to invest at an unprecedented pace to provide unrivalled connectivity for our customers. At the same time we're seeing record customer satisfaction scores across the business," Chief Executive Philip Jansen said.
BT reinstated its payout during its recently ended financial year. It has added a 5.39 pence per share final payout to its 2.31p interim dividend. Its total annual payout amounts to 7.70p.
Looking to the new financial year, BT targets adjusted revenue growth and an adjusted Ebitda of at least GBP7.9 billion, potentially a 4.2% rise.
Capital expenditure, excluding spectrum work, is earmarked at GBP4.8 billion. It expects normalised free cash flow of GBP1.3 billion to GBP1.5 billion.
"While the economic outlook remains challenging, we're continuing to invest for the future and I am confident that BT Group is on the right track," CEO Jansen said.
Alongside its yearly results, BT said it has finalised a sports joint venture with Warner Bros Discovery to show sport in the UK and Ireland.
The 50-50 JV will see BT Sport and Eurosport combine.
"By bringing together the sports content offering of both BT Sport and Eurosport UK, the JV will have one of the most extensive portfolios of premium sports rights including UEFA Champions League, UEFA Europa League, the Premier League, Premiership Rugby, UFC, the Olympic Games, tennis Grand Slams featuring the Australian Open and Roland-Garros, cycling Grand Tours including the Tour de France and Giro d'Italia and the winter sports World Cup season," BT explained.
Once the deal closes, the production and operational assets of BT Sport will become a wholly owned subsidiary of Warner Bros. BT will get GBP93 million from Warner Bros and up to GBP540 million by way of an earn-out.
The JV will also enter into a new agreement with pay-television operator Sky extending beyond 2030. It concerns distribution of the JV's sports content.
"BT will also enter into a distribution agreement with Warner Bros. Discovery to provide Discovery+ to its direct BT TV and BT Sport customers," BT said.
Discovery+ is a streaming service.
BT first announced JV talks back in February. It was aiming to conclude talks by June 30. Since the talks began, Discovery sealed its merger with WarnerMedia, an AT&T Inc spin-off.
BT had long been rumoured to sell or find a partner for BT Sport. In January, Reuters reported BT was close to selling the unit to streaming service DAZN in a deal worth roughly USD800 million.
By Eric Cunha; ericcunha@alliancenews.com
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