BT shelves efforts to find investor to share FTTP build, says Openreach can run project alone
Oh and that company-wide cost-cutting programme is 18 months ahead of schedule
BT has decided against bringing in an external investor to help with the rollout of fibre networks across Britain, this morning citing lower build costs per premise as the rationale for going it alone via its Openreach division.
"We have conducted an extensive review and held discussions with prospective investors," said CEO Philip Jansen. "However with fibre to the premise[s] build costs coming down and take-up ahead of expectations, we have decided to retain 100 per cent of the project for shareholders."
The footprint of FTTP builds by Openreach totals almost 6 million and the average build cost was lowered by £50 to between £250 to £300 per premises passed, it said. BT-owned Openreach committed to connecting 25 million homes and businesses by the end of 2026, with the help of generous tax breaks introduced by Rishi Sunak in the 2021 budget.
The tax writeoff, known as the "Super Deduction", allows BT to write off up to 130 per cent of its infrastructure deployment costs. Simon Lowth, the company’s CFO, said in May it would allow the company to pay "minimal" corporation tax over the next "couple of years."
Jansen said Openreach's three largest customers had signed up to its latest pricing offer, after UK comms watchdog Ofcom said it will limit price restrictions on full-fibre wholesale products amid the gigabit rollout quest.
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Openreach was again the fastest growing part of BT in the first half of its fiscal 2022, jumping 5 per cent year on year to £2.707bn, according to financial accounts filed today. The BT Group fell 3 per cent to £10.3bn, led by declines in Global Services and the Enterprise divisions. Profit before tax fell 5 per cent to a little over £1bn.
As expected, BT also confirmed today that its multi-year transformation programme, which includes reducing headcount by 13,000 and exiting 90 per cent of its real estate is running 18 months ahead of schedule, delivering £1bn of gross annualised saving early at a cost of £500m.
In response, BT said it has brought forward the fiscal year 2025 target of £2bn gross annualised cost savings with an expected cost of £1.3bn. Group peak cap-ex from fiscal '23, it added, is now expected to be £4.8bn, down from the expected £5bn.
"These results demonstrate an acceleration of pace in the transformation of BT. We are creating a better BT for our customers, the country and our shareholders. We're going further and faster on the UK's next generation connectivity; we're modernising BT and bringing down costs,” said Jansen. The annual dividend was reinstated today.
"While we are serving our customers better than ever, BT is also changing rapidly internally," he added.
Of course, the backdrop to this is that BT's largest investor, French billionaire and telecoms veteran Patrick Draghi, is free next month to make a bid for the entire group, having bought a 12 per cent stake via Altice in June, and saying at the time he was not launching a takeover bid, which prevented him from doing so for six months. ®