BT trading update results for the three months to 30 June 2021

BT Group plc (BT.L) today announced its trading update for the three months to 30 June 2021.

Key strategic developments:

• Openreach announced an offer for communications providers giving long-term price certainty on FTTP to drive widespread adoption of ultrafast, ultra-reliable full fibre broadband
• Announced long-term mobile network plans including: a 5G network that covers over 90% of the UK’s landmass by 2028; 4,500 square miles of new rural 4G coverage by 2025; and retiring legacy 3G services by 2023
• Announced a strengthened strategic partnership with Microsoft to accelerate innovation across enterprise voice, cyber security and industry-focussed services
• Reached agreement with the CWU¹ that recognises the need for change, ensures our colleagues continue to be treated fairly and with respect as we remain on track to modernise BT
• Announced the launch of our new SoHo (Single/Small office, Home office) unit in Enterprise
• Completed the sale of business units in Italy serving customers in the public administration and SME sectors
• Invested in Safe Security, a leader in cyber risk quantification, reflecting our increased focus on security
• Launched our Hope United campaign using the power of football to tackle online hate, as we continue to lead on the responsible use of technology

Strong operational performance with continued focus on our network growth:

• Openreach FTTP network now covers 5m premises; increased our rural FTTP target to 6.2m premises as part of our programme to reach 25m premises by the end of 2026
• Openreach announced it will stop selling legacy products to a total of 3m premises across 297 exchanges from April 2022
• Launched Home Essentials, an industry-leading social tariff available to 4.6m low income households
• Strong growth in FTTP connections and 5G-ready customer base in Consumer
• Revamped our converged Halo for business broadband bundles to provide 900Mbps full fibre and Unbreakable Wi-Fi
• Half of total Global orders won in the quarter were for products in our growth portfolio

Financials on track to deliver outlook and a path to growth:

• Revenue £5,071m, down 3%; revenue has grown in Consumer and Openreach, and remained flat in the SME sector, more than offset by declines in the Corporate and Public Sector segment in Enterprise and in Global
• Adjusted² EBITDA £1,866m, up 3%; all units have delivered EBITDA growth, with the exception of Global
• Reported profit before tax £536m, down 4% despite higher adjusted² EBITDA, primarily due to the prior year gain on disposal of our domestic Spanish operations
• Reported profit after tax £2m, down £446m, due to a one-off tax charge in the quarter to reflect the remeasurement of deferred tax balances following the enactment of the new UK corporation tax rate of 25% from April 2023
• Normalised free cash flow² £(43)m, up 12%, due to improved EBITDA and lower cash tax payments, offset by higher cash capital expenditure
• Capital expenditure up 63% to £1,507m, primarily due to investment in spectrum; capital expenditure excluding spectrum payments up 9% to £1,011m, primarily due to FTTP provisioning activities, mobile network spend and non-network infrastructure due to the Better Workplace programme
• No change to FY22 or FY23 outlook

Philip Jansen, Chief Executive, commenting on the results, said:

Our operational performance remained strong and our EBITDA grew during the first three months of the year, reflecting improved trading across most of our business and the positive benefits of our plans to modernise BT. Our results were overall in line with our expectations during the quarter, with good performance in the UK offsetting challenging conditions in Global's markets.

We’re powering ahead with our network build programmes: Openreach has now built full fibre broadband to more than 5m premises with growing customer demand; EE has set out plans for 5G on demand anywhere in the UK by 2028. We’ve also reached a partnership agreement with our largest trade union, the CWU¹ , allowing us to keep our modernisation plans on track.

We continue to invest in new strategic growth areas and have also today announced a strengthened strategic partnership with Microsoft that will see us accelerate co-innovation across all areas of our business, including enterprise voice and cyber security, supporting our growth strategy.

With trading conditions expected to see some improvement through the year, we have confirmed our outlook and remain confident that BT is on a path to growth.