(Alliance News) - BT Group PLC said on Thursday third-quarter performance missed expectations, though it is on track for its full-year.
BT shares were 4.4% lower in early trade on Thursday in London at 167.58 pence each, making it the worst performer in the FTSE 100 index.
The telecommunications firm's revenue for the nine months to December fell 2% to GBP17.25 billion, with pretax profit down 8.6% at GBP1.91 billion.
Adjusted earnings before interest, tax, depreciation, and amortisation was 3% lower at GBP5.90 billion, while normalised free cash flow fell 42% to GBP1.00 billion in part due to a deposit for the rights to European football.
BT said revenue declined due to "ongoing headwinds from regulation, competition, and legacy product declines".
BT blamed the falling profitability on the lower revenue, higher spectrum fees, investment, and higher operating costs in Openreach, the firm's UK digital network business.
Net debt was at GBP18.23 billion at the end of 2019, from GBP11.11 billion at March's end, mainly due to lease liabilities due to an accounting change. Excluding that, net debt rose GBP1.1 billion from March.
For its year ending March, BT has warned normalised free cash flow will be in the lower half of the GBP1.9 billion to GBP2.1 billion guided range due to "timing reasons".
Chief Executive Philip Jansen commented: "BT delivered results slightly below our expectations for the third quarter of the year, but we remain on track to meet our outlook for the full year.
"I'm really excited about the long-term prospects for this great company and I'm confident our plans will enable us to be bolder, smarter, and faster to ensure that we remain successful and create a better BT for the future."
Jansen also welcomed the "clarity" provided by the UK government over the role of "certain vendors" in the UK network, adding security is the priority.
"We are in the process of reviewing the guidance in detail to determine the full impact on our plans and at this time estimate an impact of around GBP500 million over the next five years," said BT.
On Tuesday, the UK government approved the role of Chinese firm Huawei Technologies Ltd in the UK's 5G network, though it will not be involved in any safety-related or critical networks. The move has angered the US, which had pushed for Huawei to be excluded, calling it an extension of the Chinese government.
Looking segmentally, BT's Consumer business delivered a 2% fall in revenue to GBP7.90 billion in the nine-month period, with adjusted Ebitda 4% lower at GBP1.80 billion. The company said predicted headwinds and a decline in the fixed base drove the revenue fall. Excluding regulation, BT's Consumer revenue was flat.
Openreach revenue was broadly flat at GBP3.82 billion, and adjusted Ebitda 3% lower at GBP2.14 billion.
Enterprise revenue was dipped 5% for the nine months to GBP4.55 billion, and adjusted Ebitda was 4% lower at GBP1.46 billion. BT blamed the falling revenue on the continued decline in "traditional" fixed voice usage, as well as some business sales.
BT Global posted a 7% fall in revenue to GBP3.28 billion, though adjusted Ebitda did rise 7% to GBP459 million. BT exited some low margin business during the nine months, and also sold off some assets, including in Spain.
By George Collard; georgecollard@alliancenews.com
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