BT upgrades full year guidance as costs lowered

12 Nov 2010

British fixed line incumbent BT reported a 2.8% year-on-year drop in revenue for the three months ended 30 September 2010, although ‘improved efficiency leading to lower costs’ helped bump up earnings before interest, tax, depreciation and amortisation (EBTIDA). In its second fiscal quarter of the 2010/11 year BT generated turnover of GBP4.98 billion (USD8.03 billion), down from GBP5.12 billion a year earlier, with the drop attributed to continued reductions in the number of fixed line voice customers. Adjusted EBITDA meanwhile rose by 2.6% compared to 2Q10, to GBP1.45 billion, helped in part by a GBP216 million, or 5% reduction in operating costs to GBP4.34 billion. Capital expenditure, however, rose as a result of the company’s major investment programmes, up by GBP50 million compared to the same period a year earlier. On the back of the results BT raised its full-year guidance for adjusted core earnings to GBP5.8 billion, up from its previous forecast of GBP5.6 billion. ‘We have made significant progress in improving profitability and cash flow, enabling us to invest in building the foundations for revenue growth in 2012/13 … We have increased our EBITDA outlook for the year and now expect to hit our GBP2 billion free cash flow target two years early.’

The telco also pointed to strong demand for its broadband services as another positive, reporting quarterly net additions of 114,000, which it claimed represented a 45% market share of the UK’s xDSL and local loop unbundled (LLU) connections in the three-month period, one of its highest-ever shares. BT also said that it had migrated around 1.6 million of its 5.34 million retail broadband subscribers to its up to 20Mbps DSL service or its new BT Infinity fibre-based offering; orders for the latter, it said, were running at more than 4,000 per week, and at end-September 2010 it had around 38,000 fibre broadband subscribers. Sign-ups to the operator’s IPTV service, BT Vision, stood at 505,000, up from 436,000 a year earlier. Fixed line voice connections meanwhile declined to 10.7 million, a 5.9% y-o-y drop.

United Kingdom, BT Group (incl. Openreach)