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LONDON (Alliance News) - BT Group PLC Thursday posted results in line with expectations for its recently ended financial year, and said it expects to achieve "modest" growth in earnings for the current year, despite anticipating some additional costs including the launch of its UEFA Champions League and UEFA Europa League content in the year.
The company expects a cash flow before specific items, pension deficit payments and the cash tax benefit of pension deficit payments of around GBP2.8 billion for the coming financial year.
BT reported pretax profit of GBP2.65 billion for the year to the end of March, up from GBP2.31 billion a year before, as a decline in revenue to GBP17.98 billion from GBP18.29 billion was offset by a reduction in operating costs of 7%.
The company attributed the fall in revenue to declines in UK public sector revenue in its BT Global Services division, which more than offset a GBP30 million boost from ladder pricing agreements.
According to broker forecasts provided by the company, BT was expected to post a pretax profit of GBP2.65 billion on revenue of GBP17.90 billion.
The company proposed a final dividend of 8.5 pence, giving it a total dividend for the year of 12.4p, up 14% from 10.9 pence the year before. It said it expects to propose a rise in dividend of between 10% and 15% in the coming year.
In Global Services, revenue was down 14% in the UK due to the declines in the public sector, which BT expects to decline further in the current year. It continued to see good growth in Asia, the Middle East and Africa, although this was offset by declines in some Latin American countries.
BT Consumer revenue rose 7% to GBP4.28 billion from GBP4.02 billion, mostly on the back of an increase in broadband and television revenue, and an increase in average revenue per customer. BT added 266,000 broadband customers in the fourth quarter of the year, taking its customer base to three million.
The company made a move into the consumer mobile space in March launching SIM-only bundles, with handsets to launch later in the year. Chief Executive Officer Gavin Patterson told journalists Thursday that this was a "first step" for BT, and pending the clearance of its acquisition of EE Ltd, it will be able to offer a whole range of services.
Revenue at telecommunications infrastructure arm Openreach declined 1% for the year to GBP5.01 billion from GBP5.06 billion, hit by regulatory price reductions.
In BT Business, revenue fell 2% as the company continued to see a fall in business call and line volumes as customers most towards data and over-internet services. The company has launched new mobile services, including the BT Cloud Phone, for small businesses.
Shareholders approved its GBP12.5 billion acquisition of mobile network EE last week, although it is still waiting for regulatory approval. On a call with journalists, Patterson said that BT believes the case it is making to the UK Competition and Markets Authority is "very strong", saying he believes it will be a good deal in terms of competition.
"We don't break the threshold of 40% in any of the key markets," Patterson said, which he believes eliminates the issue of market concentration. On the suggestion that the combination could lead the company to exceed the 40% threshold in terms of spectrum coverage, Patterson highlighted Ofcom's decision to increase this threshold next year, which means it will be "comfortably" under the threshold.
If the acquisition goes to a phase I clearance investigation, it should complete before September, and if it goes to a phase II investigation, it should complete by next March, Patterson said.
EE has not been included in its outlook for the coming year.
"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. Profit before tax and free cash flow have both grown strongly and we have delivered or beaten the outlook we set at the start of the year," said Patterson in the company's statement.
"Our performance during the year is reflected in our full year dividend, which is up 14%. Our results and the investments we are making position us well for the future and enable us to increase our free cash flow outlook for the coming year," Patterson added.
In terms of Thursday's general election, Patterson told journalists that BT is neutral on the outcome and is comfortable working with either winning party.
Shares in BT are trading up 0.1% at 454.54 pence Thursday morning.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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