UK's BT says fibre demand helps keeps free cash target in sight

BT connects 1.1 million homes to its fibre network in H1

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Shares rise 5% after cash flow targets confirmed

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BT lost 242,000 broadband lines after Sky's CityFibre launch

LONDON, Nov 6 (Reuters) - BT said it connected a record 1.1 million homes to its fibre network in the first half, helping to keep its target of 2 billion pounds of free cash flow by March 2027 in its sights.

Chief executive Allison Kirkby said Britain's biggest broadband and mobile operator had made "solid" progress in a competitive market, with customer growth across its combination of BT, EE and Plusnet brands.

Shares in BT, which have risen 65% since Kirkby took over in February last year, rose 5% in morning deals after it confirmed its full-year outlook and cash flow targets.

SKY'S LAUNCH ON RIVAL NETWORK CAUSES LINE LOSSES

Kirkby has focused BT on its core British market, where it is on track to roll out its fibre network to 25 million premises by December 2026. It has already reached 20.3 million.

As the build programme tapers, she has pledged to increase free cash flow to 2 billion pounds in 2027 and 3 billion pounds by the end of the decade.

BT lost 242,000 broadband lines in the second quarter after Sky, one of the biggest brands on its Openreach network, also launched on the rival CityFibre network.

"Our line losses were exactly in line with Q4 last year, which means what we are seeing is less competition from retail alt nets (alternative networks) being offset at this point in time with the as-expected increased wholesale competition," Kirkby told reporters.

BT has cut the wholesale prices of its fastest fibre products, a move designed to accelerate the take-up of fibre on its network beyond its market-leading 38% rate.

The regulator has given the go-ahead despite opposition from rival networks such as CityFibre.

"Just to be clear, they are still higher than other offers in the market and they are only there for two years," she said.

BT had also launched competitive offers in consumer broadband. "We're not going to lose customer base any more, particularly now we've got a nationwide network," she said.

A rise in core earnings at Openreach offset declines in consumer, business and international to deliver a 4.13 billion pounds ($5.54 billion) outcome for the six months to end-September.

Adjusted revenue slipped 3% to 9.8 billion pounds, it said. ($1 = 0.7451 pounds) (Reporting by Paul Sandle; editing by Sarah Young and Philippa Fletcher)

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