• Key developments

    • Strategy announced today to drive sustainable long term growth in value by leading in converged connectivity, including removal of 13,000 roles at a total cost of £800m – see separate press release
    • Continued improvement in customer experience metrics; Group NPS1 up 8.3 points and Right First Time2 up 4.3%
    • Clarity on the pricing of key products provided in Ofcom's final statement on Wholesale Local Access regulation
    • 40MHz of 3.4GHz spectrum secured; positions us well for launch of 5G and strengthens network leadership
    • Consumer businesses brought together from 1 April 2018 and Enterprise businesses from 1 October 2018
    • Triennial pension deficit agreed at £11.3bn, 13 year recovery plan including payments of £2.1bn over the three years to 31 March 2020 in line with prior recovery plan and a further £2.0bn contribution, due to be funded by the issuance of bonds which will be held by the BTPS; BTPS closed to future defined benefit accruals from 30 June 2018 reducing future exposure to pensions risk – see separate press release
    • Outlook for 2018/19: underlying3 revenue down c.2%, adjusted4 EBITDA £7.3bn - £7.4bn, capital expenditure5 c.£3.7bn and normalised free cash flow4 of £2.3bn - £2.5bn
    • Proposed final dividend of 10.55p, giving a full year dividend of 15.4p, unchanged from 2016/17

    Operational:

    • Gfast premises of 1m and FTTP premises of 560,000 passed in Q4; over 1.5m premises able to connect to ultrafast service
    • Openreach fibre connections at 555,000 in Q4 with superfast fibre broadband passing nearly 27.6m UK premises
    • 4G coverage reaches 90% of the country as we deploy in hard to reach areas
    • Mobile postpaid net additions of 95,000, with low churn of 1.2%; monthly mobile postpaid ARPU down 1% to £26.0
    • BT Sport rights packages secured; includes Premier League matches for a further three years from 2019/20
    • Average BT Sport viewing increased 19% year on year; second best quarterly performance since launch
    • BT Consumer revenue generating units per customer increased 3% to 2.03, with ARPU up 5% to £41.7
    • Order intake, on a rolling 12-month basis, up 1% to £3,391m for Business and Public Sector, down 28% to £1,419m for Wholesale and Ventures and down 17% to £3,845m for Global Services, reflecting market conditions and our strategy to exit lower margin business
    • Integration run rate cost synergies now at £290m; restructuring initiatives delivered in year savings of £180m

    Financial:

    • Reported revenue down 1% for the year and 3% for the quarter. Underlying4 revenue down 1% for the year and 1.4% for the quarter
    • Adjusted4 EBITDA of £7,505m for the year, down 2%, and £2,083m for the quarter up 1%
    • Reported profit before tax up 11% for the year and up 98% for the quarter mainly due to specific items in the prior year. Adjusted4 profit before tax down 2% for the year but up 1% for the quarter
    • Reported basic earnings per share 20.5p for the year. Adjusted4 earnings per share 27.9p for the year
    • Net cash inflow from operating activities £4,927m for the year, and £746m for the quarter and normalised free cash flow4 £2,973m for the year, and £1,026m for the quarter
    • 2017/18 underlying4 revenue down 1.0% and lower than our outlook for the full year. Adjusted4 EBITDA within our outlook range, normalised free cash flow4 exceeded our outlook

    Gavin Patterson, Chief Executive, commenting on the results, said

    "BT delivered a solid set of financial results in the fourth quarter, with growth in our consumer divisions offset by declines in our enterprise businesses, due to both challenging market conditions and our decision to exit lower margin business.

    "We continue to invest for growth, having now passed 1.5m premises with our ultrafast network and securing 40MHz of 3.4GHz spectrum suitable for 5G mobile services. We are improving our customer experience across the Group, with our key metrics of Group NPS1 and Right First Time2 both strongly up.

    "Our integration and restructuring activities remain on track. The integration of EE into BT is delivering run rate cost synergies of £290m. Our restructuring programme has removed over 2,800 roles and delivered savings of £180m during the year.

    "I am pleased that we have reached agreement with the Trustee on the pension valuation and recovery plan, which is affordable within our capital allocation framework, and draws a line under a key source of uncertainty for our stakeholders.

    "We have announced today an update to our strategy to accelerate leadership in converged connectivity and services. Our strategy will drive sustainable growth in value by focusing on delivering differentiated customer experiences, investing in integrated network leadership, and transforming our operating model."

    News release

    KPIs

    Slides

    Consensus

  • Key strategic developments:

    • Openreach to deliver FTTP to 3m premises by the end of 2020; sets course to reach 10m homes and businesses by mid-2020s with the right conditions
    • Continued improvement in customer experience metrics; Group NPS up 5.5 points and Right First Time up 3.6%
    • BT TV customers to access premium sport and entertainment content under TV deal with Sky
    • Triennial valuation of the BT Pension Scheme is proceeding and constructive discussions continue with the Trustee. We are appealing the court decision against changing the index used for pension increases from RPI for Section C members
    • Transformation programme and restructuring initiatives on track 

    Operational:

    • Openreach fibre connections at record high of 600,000, with superfast fibre broadband now passing 27.4m UK premises
    • BT Consumer revenue generating units per customer increased 3% to 2.02, with ARPU up 5% to £41.3
    • Mobile postpaid net additions of 235,000, with low churn of 1.2%; monthly mobile postpaid ARPU down 2% to £26.2
    • Average BT Sport viewing increased 23% year on year; best quarterly performance since launch
    • Order intake, on a rolling 12-month basis, up 12% to £3,591m for Business and Public Sector, down 38% to £1,257m for Wholesale and Ventures and down 25% to £3,732m for Global Services, reflecting market conditions

     

    Financial:

    • Reported revenue down 3% to £5,970m and underlying revenue down 1.5%
    • Adjusted EBITDA decreased 2% to £1,826m, reflecting investment in mobile devices and customer experience, along with higher business rates and pension costs, partly offset by cost savings
    • Net cash inflow from operating activities of £1,596m up £81m, and normalised free cash flow of £702m up £96m mainly due to working capital phasing
    • Full year outlook maintained

    Gavin Patterson, Chief Executive, commenting on the results, said

    “Our third quarter financial results are broadly in line with our expectations and we remain confident in our outlook for the full year. We continue to improve our customer experience metrics across the Group, with our sixth successive quarter of improved customer perception.

    “We continue to work closely with the UK Government, Ofcom and our customers to expand the deployment of fibre and Openreach recently announced plans to accelerate our FTTP deployment to three million premises by the end of 2020.

    “We agreed a TV deal with Sky that will deliver market leading sports and entertainment channels to our BT TV platform by early 2019, reinforcing our strategic goal of being the best provider in the UK of converged network services.

    “The triennial valuation of the BT Pension Scheme is proceeding and constructive discussions continue with the BTPS Trustee. We still expect to complete the valuation in the first half of the 2018 calendar year. Our aim remains to deliver fair, flexible and affordable pensions to all of our employees.

    “We are delivering against our strategy, capitalising on opportunities and responding to market challenges with a robust set of actions. Looking ahead, we’re confident in the steps we are taking to improve the performance of BT for all our stakeholders.”

    News release

    KPIs

    Slides

    Consensus

  • Key strategic developments for the quarter

    • Bringing together BT Consumer and EE is progressing well under new leadership team
    • Openreach consultation identified broad industry support and key enablers for a large-scale FTTP broadband network
    • Voluntary offer made to deliver the Government’s goal for universal broadband access
    • Continued improvement in customer experience metrics; Group NPS up 3.8 points and Right First Time up 2.3%
    • Transformation programme and restructuring initiatives on track
    • Review of future pension benefits continues and we expect to consult with affected employees on proposed changes shortly

    Operational:

    • BT Consumer revenue generating units per customer increased 3% to 2.01; monthly mobile ARPU up 9% to £20.9
    • Mobile postpaid net subscriber additions of 279,000, with low churn of 1.2%
    • Openreach fibre connections remain high at 505,000, with fibre broadband now passing 27.1m UK premises
    • Order intake up 22% to £3.8bn for Business and Public Sector and up 32% to £1.8bn for Wholesale and Ventures, on a 12-month rolling basis
    • Taking robust actions to improve the performance of Global Services

    Financial:

    • Reported revenues down 1% to £5,949m and underlying revenue down 1.5%
    • Adjusted EBITDA decreased 4% to £1,811m, reflecting investment in sports rights and customer experience, along with higher pension costs, business rates and decline in Global Services partly offset by cost savings
    • Net cash inflow from operating activities of £1,270m down £464m, and normalised free cash flow of £689m down £205m due to working capital phasing and higher capital expenditure
    • Interim dividend for future years set at 30% of prior year’s full year dividend. Interim dividend for this year held flat at 4.85 pence per share. Progressive dividend policy unchanged
    • Full year outlook maintained

    Gavin Patterson, Chief Executive, commenting on the results, said

    “Our first half results are in line with our expectations as encouraging results in our consumer facing lines of business, notably EE, helped offset ongoing challenges in our enterprise divisions, in particular Global Services. Given our underlying business performance, we are maintaining our outlook for the year.

    “As the UK’s leading converged telecommunications provider we continue to make positive progress on all our strategic priorities. Improving customer experience is critical to our success and we have seen continued positive progress underpinned by investments in operational improvements, increased network quality and customer-centric product development. Our integration and restructuring programmes are also on track to deliver run-rate savings of £250m and £150m respectively by the end of this year. We are working closely with the UK Government, Ofcom and our Communications Provider partners to find the right solutions to accelerate the deployment of fibre and our universal broadband commitment. We are committed to delivering ultrafast speeds to 12 million premises by the end of 2020. 

    “From next year the interim dividend per share will be fixed at 30% of the prior year’s full year dividend. However, in this transitional year we are proposing to hold our interim dividend at 4.85 pence per share. Our progressive dividend policy remains unchanged.”

    News release

    KPIs

    Slides

    Consensus

  • Key strategic developments for the quarter

    • Consultation launched by Openreach on building the investment case for a large-scale FTTP network
    • Consumer and EE divisions will be brought together to drive converged products and accelerate transformation
    • Forthcoming spectrum auction will allow BT to bid for high frequency spectrum facilitating upgrades to 5G technology
    • Continued improvement in customer experience metrics, Group Customer Perception and Right First Time
    • BT won exclusive live rights for European elite rugby cup competitions for 2018/19 – 2021/22

    Operational:

    • Restructuring programme on track. Plans announced to streamline our Italian business
    • Mobile postpaid net subscriber additions of 210,000, with churn remaining low at 1.1%
    • Openreach fibre connections remain high at 437,000, with fibre broadband now passing 26.8m UK households
    • Retail broadband net additions represent 53% market share, with fibre net additions of 170,000
    • Consumer revenue generating units per customer increased 4% to 2.00. Monthly mobile ARPU was £20.4, up 9%

    Financial:

    • Settlement of warranty claims with Deutsche Telekom and Orange under EE acquisition agreement, arising from the previously reported issues in Italy, with specific item charge of £225m
    • Reported revenue up 1% and underlying revenue up 0.2% driven by our consumer facing businesses
    • Adjusted EBITDA decreased 2% due to increased pension costs, business rates, sport programme rights and our investment in customer experience
    • Net cash inflow from operating activities of £1,315m down £19m, and normalised free cash flow of £556m up £108m due to working capital phasing
    • Outlook maintained with share buyback of £200m in the quarter

    Gavin Patterson, Chief Executive, commenting on the results, said

    “BT has delivered an encouraging performance in the first quarter of the year. We’ve made good progress in our key areas of strategic focus: deliver great customer experience, invest for growth, and transform our costs. In particular, I’d highlight the growth achieved by our consumer facing businesses, helped by mobile.

    “BT, with Openreach, is well placed to support the roll out of FTTP in the UK, and we’re consulting with Ofcom, Government and other communications providers to build the investment case to achieve this outcome.

    “Our new Consumer business will operate our three distinct brands; BT, EE and Plusnet; to leverage our position as the largest and only fully converged player in the market, spanning fixed and mobile networks, consumer products and services as well as content.

    “We will continue to simplify and streamline the business and rationalise our costs as demonstrated by our ongoing performance transformation programme. Our businesses are leaders in their core segments and as we drive the business forward I am confident in the outlook for our Company.”

    News release

    Organisation and senior management changes at BT

    KPIs

    Slides

    Consensus