BT Group: Results for the full year to 31 March 2023

Philip Jansen, Chief Executive, commenting on the results, said      
“We have delivered our outlook for FY23: this year we’ve grown both pro forma revenue and EBITDA for the first time in six years while navigating an extraordinary macro-economic backdrop. Over the last four years we have stuck firmly to our strategy and it’s working.

“Openreach is competing strongly and it’s clear that customers love full fibre. The Openreach Board has reaffirmed its target to reach 25 million premises with FTTP by the end of 2026 and plans to further accelerate take-up on the network. In Consumer we’re delivering for customers with strong growth in FTTP and 5G, and we’re also seeing green shoots in B2B with a return to revenue growth in the final quarter in Global and the creation of our newly integrated Business unit.

“By continuing to build and connect like fury, digitise the way we work and simplify our structure, by the end of the 2020s BT Group will rely on a much smaller workforce and a significantly reduced cost base. New BT Group will be a leaner business with a brighter future.”

Continued strong delivery against strategy

• We delivered revenue and adjusted¹ EBITDA in line with our outlook for FY23, despite significant headwinds; normalised free cash flow was delivered at the lower end of our guidance range due to increased cash capital expenditure, primarily in Openreach
• FTTP build of 702k premises passed in the quarter at an average build rate of 54k per week, with 41% of our 25m build completed; FTTP footprint of 10.3m, up 43%, with a further 6m where initial build is underway
• Customer demand in Openreach for FTTP extremely strong with FY23 orders up 70% year on year; take up rate grew to 30.4% with record net adds of 395k in the quarter; base now c.3.1m
• Record quarter of Consumer FTTP connections up 50% year-on-year with the base now over 1.7m
• We have 8.6m 5G connections, up 62% on last year; our 5G network now covers 68% of the population
• Cost transformation on track with gross annualised cost savings of £2.1bn since April 2020 against our £3bn target, with a cost to achieve of £1.1bn against a target of £1.6bn
• Created Business through the merger of Enterprise and Global to enhance value for all B2B customers, strengthen our competitive position and deliver material synergies
• The UK Government announced a three-year 100% tax expensing benefit on qualifying UK capex, effective from 1 April 2023; this will allow Openreach to deliver increased connections and offset inflation whilst reconfirming our 25m FTTP target by the end of 2026
• New metrics announced to track our transformation into a next-generation connectivity provider (see page 4), focussed on our networks, our customers and becoming a more efficient organisation
• Total labour resource² to reduce from 130k to 75-90k by FY28-FY30

Pro forma full year revenue and adjusted¹ EBITDA growth:

• Revenue £20.7bn, down 1% with the growth in Openreach more than offset by decline in the other units
• Adjusted¹ EBITDA £7.9bn, up 5% due to growth in Openreach and Consumer offset by a decline in Enterprise
• Revenue up 1% and adjusted¹ EBITDA up 3% on a Sports Joint Venture ('JV') pro forma¹ basis
• Reported profit before tax £1.7bn, down 12% due to increased depreciation from network build and specific items, partially offset by adjusted¹ EBITDA growth
• Reported capital expenditure ('capex') £5.1bn, down 4%; capex excluding Spectrum up 5% due to higher fixed network investment primarily in Openreach for building, and connecting more customers to, FTTP; cash capex was c.£0.2bn higher at £5.3bn (up 10%) as we reduced our capital creditors; significantly lower capex in Q4 given unwind of Openreach work in progress ('WIP')
• Net cash inflow from operating activities £6.7bn; normalised free cash flow¹ £1.3bn, down 5% due to increased cash capex and adverse working capital movements offset by EBITDA growth and a tax refund; increase in Q4 due to timing of working capital, lower cash capex, and increased EBITDA
• Net debt £18.9bn, up £850m primarily due to pension scheme contribution of £1bn
• Gross IAS 19 deficit of £3.1bn, up from £1.1bn at 31 March 2022 mainly due to the impact of higher real gilt yields partly offset by deficit contributions
• Final dividend of 5.39 pence per share (pps) bringing the full year dividend to 7.70pps, flat year on year
• FY24 Outlook: revenue and EBITDA growth on a pro forma basis; capital expenditure excluding spectrum of £5.0bn-£5.1bn; normalised free cash flow of £1.0bn-£1.2bn

Customer-facing unit updates

Performance against FY23 outlook