Cost reductions boost BT’s 1H EBITDA, free cash flow

29 Jul 2010

British fixed line incumbent BT Group saw a 6% year-on-year increase in first-quarter adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), while it reiterated its full year guidance on the back of reduced operating costs. For the three months ended 30 June 2010 BT saw adjusted EBITDA reach GBP1.399 billion (USD2.18 billion), despite revenues falling to GBP5.006 billion, a 4% decline compared to the same period a year earlier. Notably BT said that it had managed to reduce operating costs before specific items by 6% to GBP4.424 billion, due in part to reductions in total labour costs and the delivery of other cost savings by all lines of business. The company also noted that free cash flow had improved as a result of operating cost reductions; for 1H2010 BT reported free cash flow of GBP415 million, an improvement of GBP537 million.

At end-June 2010 BT reported that the number of fixed voice lines in service had fallen to 12.7 million, down from 14.1 million a year earlier, while retail broadband subscriptions had climbed 8.1% year-on-year to 5.23 million. The company is hoping that the launch of commercial fibre-based broadband services will help further drive uptake, and it also reported that as of this month its fibre rollout had reached the milestone passing more than 1.5 million UK premises, adding that it is currently adding around 100,000 premises to its coverage area on a weekly basis.

Commenting on the results BT chief executive Ian Livingston noted: ‘We have made an acceptable start to the year, delivering improved financial results while investing in the future of the business.’

United Kingdom, BT Group (incl. Openreach)