BT reports lower revenues amid tough conditions in Europe and at home

25 Jul 2012

British fixed line incumbent BT has revealed that in the three months to end June 2012 it recorded a 6% decline in group revenue, which it said reflected ‘the tough conditions in Europe and the financial services sector, the impact of regulatory price reductions and lower revenue from calls and lines’. For the company’s first quarter of the 2013 fiscal year it generated turnover of GBP4.484 billion (USD6.96 billion), with BT noting that transit revenue had fallen by GBP67 million (including mobile termination rate [MTR] reductions of GBP60 million) against the corresponding period a year earlier. Further, the operator said that it had seen a GBP56 million negative impact from foreign exchange movements in 1Q13, a drop it largely attributed to the weakening of the euro, while it also recorded a GBP13 million impact from disposals. Total operating costs before depreciation and amortisation and specific items meanwhile fell by GBP317 million to GBP3.11 billion, while the telco also noted that net labour costs had fallen by 2% year-on-year to GBP1.19 billion. Payments to telecommunications operators, it added, were 16% lower than in the corresponding reporting period last year, reflecting lower MTRs and reduced transit and wholesale call volumes. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 2% to GBP1.46 billion, while capital expenditure totalled GBP622 million in the quarter, up 7%, principally due to the telco’s increased investment in fibre broadband.

In the retail sector BT reported a 3% y-o-y decline in revenue which it said was ‘consistent with the improved trend seen in the previous quarter’. Consumer turnover fell by 2%, with lower calls and lines revenue partially offset by growth in broadband, driven by an increasing contribution from fibre. Business revenue meanwhile fell by 6% compared to 1Q12, with BT claiming that turnover in this sector ‘continued to be impacted by lower IT hardware sales reflecting market conditions and [its] decision during the second quarter of last year to withdraw from low-margin IT hardware trade sales’.

Operationally, during the three-month period BT added 85,000 retail broadband customers, a figure it said represented 50% of the country’s broadband market net additions, while it also noted that it signed up more than 150,000 customers to its BT Retail fibre-based broadband service to bring the total to more than 700,000. Meanwhile, BT Vision, the telco’s IPTV service, registered 21,000 new customers in the quarter to increase the total user base to 728,000.

BT CEO Ian Livingston said of the results: ‘Our financial performance allows us to keep investing for the future. Our engineers are rolling out fibre at pace bringing fibre broadband to over two million more homes and businesses in the quarter and it’s now available to over eleven million premises. Our investment plans are creating around 2,000 jobs in 2012 by recruiting engineers to support our fibre plans and opening four new UK call centres. We continue to make good progress with our investments in the faster growing economies.’

United Kingdom, BT Group (incl. Openreach)