Last checked at 27 Jul 2018 07:00
BT Group plc
Trading update for the first quarter to 30 June 2018
27 July 2018
BT Group plc (BT.L) today announced its trading update for the first quarter to 30 June 2018.
Key developments for the quarter
Strategic:
· Successfully launched new converged products including BT Plus and 4G Assure
· EE to launch the UK's first live 5G trial network in East London in October
· Future Telecoms Infrastructure Review conclusion and Ofcom's approach to future regulation provide positive progress towards enabling fair returns for infrastructure investment
· Openreach announced new wholesale pricing discounts to accelerate superfast and ultrafast uptake
· Continued improvement in customer experience metrics; Group NPS1 up 1.9 points and Right First Time2 up 3.1%
· Initiatives to transform our operating model on track; new Enterprise senior leadership team announced
Operational:
· Over 1.7m total ultrafast premises passed; currently building FTTP to c.10,000 premises per week
· Monthly fixed ARPU up 1% to £37.9, with increased mix of SIM only reducing postpaid mobile ARPU by 1% to £21.7; churn remains low at 1.2%
· Mobile customers up 4% in Business and Public Sector. External broadband lines down 6% in Wholesale and Ventures and 3% in Business and Public Sector
Financial:
· Reported revenue of £5,715m. Underlying3 revenue down 2%4 as regulated price reductions in Openreach and declines in our enterprise businesses offset growth in our consumer business
· Adjusted3 EBITDA up 1%4 to £1,800m mainly driven by stronger handset margins in our consumer business and restructuring related cost savings
· Reported profit before tax of £704m. Adjusted3 profit before tax up 3%4 at £816m
· Normalised free cash flow3 of £507m down 9% mainly driven by increased cash capital expenditure partly offset by timing of working capital movements
· Reported capital expenditure broadly flat at £839m
Gavin Patterson, Chief Executive, commenting on the trading update, said "We've made a good start to the year. We are making positive progress against our strategy. Our customer experience metrics continue to improve and we have seen the successful launch of new converged products including BT Plus, our first Consumer converged offering and 4G Assure, for business customers. Initiatives to transform our operating model have seen a gross reduction in c.900 roles across the Group and improved cost performance. "EE continues to maintain its network leadership and will switch on the UK's first live 5G network trial in October. Openreach continues its FTTP network deployment and is currently building to c.10,000 premises per week. New Openreach wholesale pricing will incentivise communications providers to encourage more of their customers onto better services and ultimately move the vast majority of Britain's homes and businesses onto superfast and ultrafast platforms. We welcome the initial outcome of DCMS' Future Telecoms Infrastructure Review and Ofcom's approach to future regulation and look forward to further engagement with all our key stakeholders to ensure greater clarity, certainty and support as we look to realise our broader investment ambitions. "Our outlook for the year remains unchanged." |
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First quarter to 30 June |
| 2018 (IFRS 15) | 2017 (IFRS 15 pro forma unaudited) | 2017 (IAS 18) |
Change4 |
|
| £m | £m | £m | % |
Reported measures |
|
|
|
|
|
Revenue |
| 5,715 |
| 5,837 | n/m |
Profit before tax |
| 704 |
| 418 | n/m |
Profit after tax |
| 549 |
| 285 | n/m |
|
|
|
|
| |
Adjusted measures |
|
|
|
| |
Adjusted revenue | 5,716 | 5,835 | 5,849 | (2) | |
Change in underlying3 revenue |
|
|
| (2) | |
Adjusted3 EBITDA |
| 1,800 | 1,785 | 1,785 | 1 |
Adjusted3 profit before tax |
| 816 | 791 | 791 | 3 |
Capital expenditure |
| 839 | 835 | 835 | - |
Normalised free cash flow3 | 507 | 556 | 556 | £(49)m | |
Net debt3 |
| 11,227 | 8,810 | 8,810 | £2,417m |
1 Group NPS measures Net Promoter Score in our retail business and Net Satisfaction in our wholesale business
2 Measured against Group-wide 'Right First Time' (RFT) index
3 See Glossary on page 2
4 Measured against unaudited IFRS 15 pro forma comparative period in the prior year
n/m = IFRS 15 to IAS 18 comparison not meaningful
Customer facing unit results for the first quarter to 30 June 2018
| Adjusted1 revenue | Adjusted1 EBITDA | ||||
First quarter to 30 June | 2018 | 20172 | Change | 2018 | 20172 | Change |
| £m | £m | % | £m | £m | % |
Consumer | 2,591 | 2,540 | 2 | 610 | 556 | 10 |
Business and Public Sector | 1,085 | 1,132 | (4) | 350 | 342 | 2 |
Wholesale and Ventures | 459 | 497 | (8) | 154 | 174 | (11) |
Global Services | 1,147 | 1,246 | (8) | 95 | 73 | 30 |
Openreach | 1,217 | 1,248 | (2) | 567 | 621 | (9) |
Other | 1 | 2 | n/m | 24 | 19 | 26 |
Intra-group eliminations | (784) | (830) | 6 | - | - | - |
Total | 5,716 | 5,835 | (2) | 1,800 | 1,785 | 1 |
1 See Glossary
2 Unaudited IFRS 15 pro forma used for comparative period in the prior year
n/m = not meaningful
SUMMARY AND OUTLOOK
There is no change to our financial outlook for 2018/19 from that published on 25 June which reflected the adoption of the IFRS 15 accounting standard.
2018/19 | |
Change in underlying1 revenue (IFRS 15 basis) | Down c.2% |
Adjusted1 EBITDA (IFRS 15 basis) | £7.3bn - £7.4bn |
Normalised free cash flow1 | £2.3bn - £2.5bn |
Capital expenditure2 | c.£3.7bn |
1 See Glossary
2 Excluding BDUK clawback
Enquiries
Press office: |
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Tom Engel | Tel: 020 7356 5369 |
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Investor relations: |
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Mark Lidiard | Tel: 020 7356 4909 |
We will hold a conference call for analysts and investors in London at 9am today and a simultaneous webcast will be available at www.bt.com/results
We are scheduled to announce the second quarter and half year results for 2018/19 on 1 November 2018.
Glossary of alternative performance measures
Adjusted | Before specific items |
Net debt | Loans and other borrowings (both current and non-current), less current asset investments and cash and cash equivalents. Currency denominated balances within net debt are translated to Sterling at swapped rates where hedged |
Normalised free cash flow | Free cash flow before specific items and the cash tax benefit of pension deficit payments |
Specific items
| Items that in management's judgement need to be disclosed separately by virtue of their size, nature or incidence. Further information is provided in note 1 on page 9 |
Underlying | Excludes specific items, foreign exchange movements and the effect of acquisitions and disposals. Further information is provided in note 2 on page 9 |
Our commentary focuses on the trading results on an adjusted basis. Unless otherwise stated, revenue, earnings before interest, tax, depreciation and amortisation (EBITDA), profit before tax, and normalised free cash flow are measured before specific items. Further information is provided in note 1 on page 9.
Click on, or paste the following link into your web browser, to view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/9434V_1-2018-7-26.pdf