13 – lucky for some, but not BT because that's how hard pre-tax profits crashed in Q1

COVID-19 ravages former state monopoly as nearly all divisions shrink

While the cloud businesses at Google and AWS are shovelling cash under their mattress and Apple is making bank, back in Britain BT has been left to count the cost of the COVID-19 pandemic.

The UK's beloved former state-owned telco outlined Q1 numbers today and finally provided a full-year forecast for fiscal 2021 – the outlook isn't pretty but then again it isn't for so many in the industry.

Revenue for the three months ended 30 June fell 7 per cent year-on-year to £5.248bn and pre-tax profit dropped 13 per cent to £561m. All of BT's divisions, except Openreach, posted declines.

Consumer fell 7 per cent to £2.362bn, "impacted heavily by COVID-19" with "limited sport to broadcast" and "the closure of our retail stores". Britain was locked down on 23 March, right at the end of BT's previous financial year. Some 80 per cent of the stores were reopened following an easing of lockdown rules.

In the Enterprise wing, revenue dropped 9 per cent to £1.352bn, "primarily due to ongoing declines in legacy products and sharply reduced business activity… as a result of COVID-19". BT said its SMEs segment in particular had seen lower call volumes and fixed and mobile upgrades.

The unit has hired a new boss, Rob Shutter, former president and CEO of African telco MTN Group. He will replace Gerry McQuade who is "retiring from BT" at the end of the current financial year, BT said.

BT's Global division was also down 9 per cent to £990m, and again the virus was blamed, along with a deliberate decision to exit low-margin legacy businesses. A favourable move in foreign currency and higher videoconferencing volumes meant sales shrinkage wasn't as bad as it could have been.

Openreach was the only part of BT to report growth, albeit up just 1 per cent to £1.286bn. Higher rental bases in fibre, up 19 per cent, and Ethernet, up 10 per cent, were almost offset by declines in legacy kit and price reductions.

BT previously suspended dividend payments for this current fiscal.

"Although uncertainties remain, we are now able to provide an outlook for this financial year," said CEO Philip Jansen, who himself became infected by COVID-19 in March. "Despite our strong operational performance in the first three months of the year, it is clear that COVID-19 will continue to impact our business as the full economic consequences unfold."

BT reckons revenue for fiscal 2021 ending March will decline between 5 to 6 per cent and adjusted earnings before income tax, depreciation and amortisation is estimated to fall between £7.2bn and £7.5bn, down from £7.9bn in the prior financial year.

This week, Openreach committed to building FTTP for 3.2 million areas by 2025/26 and stop selling copper to around 1.2 million FTTP-enabled premises in 117 exchange areas from June next year. ®

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