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BT keeps the faith in 'like fury' fiber broadband buildout as revenues dip

Almost 10 million premises hooked up but cost-cutting campaign continues

BT Group is leaning into its fiber rollout and cost-cutting to balance the books amid a 3 percent drop in revenue for its Q3 ended 31 December.

The UK's former state-owned telecom biz reported revenue of £5.2 billion ($6.4 billion) for three months of its fiscal 2023, down from £5.3 billion ($6.5 billion) in the same period last year.

CEO Philip Jansen said the company continues to "accelerate our investments in the UK's leading next-generation networks" and that BT is "going further on cutting costs to deliver £3 billion in annualized savings by the end of FY25."

He pointed to the company's merging of its Enterprise and Global operations into a new BT Business unit as another move designed to save costs.

The company also said it is introducing CPI-linked price increases to offset the cost of inflation, as well as pay for increased data usage and more investment in next-generation networks.

Additional action was necessary with regard to operating costs to mitigate unforeseen energy, pay and equipment expenses, BT said, a reference to spiraling energy prices and the pay increase it agreed for workers last year to halt the long-running industrial dispute involving thousands of Openreach engineers and BT Group call center personnel.

On its fiber broadband rollout, BT claimed it achieved a "record FTTP build of 810,000 premises passed" in the previous quarter, at an "average build rate of 62,000 per week," and asserted that this accounts for 38 percent of the company's 25 million FTTP builds completed. But "premises passed" implies that while the telco may have laid the fiber infrastructure, not all those homes will have been connected up.

BT said customer demand for FTTP is "extremely strong" with orders up 51 percent year on year, and net additions to its network of 324,000 during the last quarter.

"On full fibre, we're building – and now connecting – like fury: 9.6 million premises reached to date, with 29 percent already connected, and our 5G mobile network now reaches 60 percent of the UK population," Jansen effervesced.

Openreach, BT's wholly owned infrastructure subsidiary, detailed new improved discounts for FTTP connections and rental charges for ISPs that will apply from April 1, as we reported last year. It also announced the launch of 1.2Gbps and 1.8Gbps products.

Revenue growth in Q3 was due to price increases and increased sales of fiber-enabled products and Ethernet, BT stated. This was partly offset by decline in income from physical lines and a decrease in chargeable repairs due to "lower repair volumes."

Turnover growth in BT's Consumer division was flat, the company said, due to the disposal of BT Sport offsetting service revenue gains. BT Sport was merged with Eurosport UK last year in a joint venture with Warner Bros. Discovery.

Nevertheless, BT claimed it had shown "strong performance in tough market conditions," bringing in £2.4 billion ($2.9 billion) for the quarter.

The Enterprise division saw revenue decline "due to the migration of a MVNO customer," presumably a reference to Virgin Media O2, which migrated its mobile customers away from BT's EE network to Vodafone and O2 following its merger with the latter. This was partially offset by growth from SME and SoHo customers, it said.

The telco also highlighted a contract win with UK tax authority HMRC to replace its in-house IT services provider with a managed network offering, plus a contract with the Ministry of Defence to upgrade its legacy broadband infrastructure.

Meanwhile, the Global division saw revenues decline due to "lower strategic equipment sales" and the impact of prior year divestments, according to BT, although this was partly offset by a "£95 million ($117 million) positive foreign exchange movement." ®

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