In what could be a case of the pain before the gain, BT has released its end-of-year results, which it said shows “strong progress” in its strategic priorities and positive leading indicators despite revenues falling back on an annual basis.
For the financial year ended 31 March 2022, BT posted revenues of £20.9bn, slipping 2% on an annual basis, reflecting revenue decline in its Enterprise and Global business lines but offset by growth in the Openreach broadband provision division, whose fibre roll-out programme accelerated throughout the year. Consumer revenues were flat for the year and showed signs of returning to growth in the fourth quarter.
These dynamics were the engine for adjusted EBITDA of £7.6bn, up 2% compared with the end of the previous financial year, with revenue decline said to be more than offset by lower costs from BT’s modernisation programmes, tight cost management and lower indirect commissions.
Reported profit before tax was £2bn, rising 9% year-on-year due to increased EBITDA offsetting higher finance expense. The company’s capital expenditure in the 12-month period was £5.3bn, a marked increase of 25% compared with 2020/21, and excluded spectrum charges of £4.8bn, up 14% primarily due to continued higher spend on its fibre infrastructure and mobile network.
At the end of the year, Openreach had brought full-fibre broadband to more than seven million homes and businesses across the UK – with an annualised fourth-quarter build rate of more than three million premises – including more than two million in what it said is the hardest-to-reach “final third” of the country.
Claiming to have already built the new technology to more than a quarter of its target footprint, Openreach said its engineers were installing about 800 metres of cable every minute and passing more than 50,000 new homes and businesses every week. The end result was that it was confident of being on track to reach 25 million premises in the UK by December 2026.
Openreach also signed a memorandum of understanding (MoU) on a framework with TV and internet provider Sky on fibre-to-the-premises (FTTP) co-provisioning, with Sky engineers set to complete the majority of their FTTP on-premise provisioning activities on Openreach’s FTTP network. In the mobile world, BT’s EE division’s 5G network now covers over 50% of the UK population, and the firm’s 5G-ready customer base stood at more than 7.2 million.
As it looks to focus on the core infrastructure products, and giving a boost to its finances, BT announced that it had inked a deal with the newly merged media firm Warner Bros Discovery to create a premium sport venture offering for the UK & Ireland, based on its BT Sport broadcasting concern.
As part of the deal, BT will receive £93m from Warner Bros Discovery and up to approximately £540m by way of an earn-out from the joint venture, subject to certain conditions being met. BT plc will retain a 50% interest in the joint venture, and Warner Bros. The value of the gross assets of BT Sport business to be contributed to the joint venture and the operating businesses of BT Sport is calculated to be £339m, and it had an operating loss for the year of £222m.
Commenting on the company’s annual results, BT CEO Philip Jansen said that while the economic outlook remained challenging, the company was continuing to invest for the future, and that he was confident BT Group was on the right track.
“BT Group has again delivered a strong operational performance thanks to the efforts of our colleagues across the business,” he said. “Openreach continues to build like fury. Meanwhile, our 5G network now covers more than 50% of the UK population. We have the best networks in the UK and we’re continuing to invest at an unprecedented pace to provide unrivalled connectivity for our customers. At the same time, we’re seeing record customer satisfaction scores across the business.
“We have finalised the sports joint venture with Warner Bros Discovery to improve our content offering to customers, aligning our business with a new global content powerhouse.
“Separately, we have strengthened our strategic partnership and key customer relationship with Sky, having now extended our reciprocal channel supply deal into the next decade and agreed an MoU to extend our co-provisioning agreement,” said Jansen. “Our modernisation continues at pace and we are extending our cost savings target of £2bn by the end of financial year 2024 to £2.5bn by the end of financial year 2025.”