BT has promised investors there is light at the end of the tunnel after the effects of coronavirus saw profits shrink by a fifth to £1.1 billion during the first half of the year.
The company said overall revenues remained “relatively resilient” despite an 8% drop to £10.6 billion for the six-month period but there were issues caused by economic conditions and the effects of lockdown measures.
Reduced business activity and a rise in flexible working contributed to a 9% fall in business revenues, while consumer income was down 6%. Part of that can be attributed to BT Sport which had offered subscribers the opportunity to pause payments during the lockdown-enforced suspension of live sport.
However, there is confidence that long-term network investments and restructuring efforts will pay off going forward.
Despite challenges presented by Covid-19, Openreach is adding 40,000 properties a week to its fibre-to-the-premise (FTTP) network. Total footprint now stands at 3.5 million and all major Openreach customers are now selling full fibre services. BT says there has been a strong sales increase in Q2, with its own retail fibre customer base rising by 60% year-on-year.
The expansion of the EE 5G network has continued and the service is now available in 112 towns and cities. BT says there are now one million 5G-ready customers on its network and will hope that demand for the iPhone 12 – the first compatible Apple handset – will drive adoption.
With all that in mind, BT has increased its forecast going forward and plans to reinstate its dividend next year.
“BT delivered financial results in-line with expectations for the first half of the year, thanks to strong operational performance during exceptional circumstances,” said Philip Jansen, BT CEO.
“Customer demand during the pandemic has shown how critical our networks have become, and our significant network investments have helped us double the number of Openreach’s FTTP orders compared to this time last year and have seen our leading 5G network expand to 112 towns and cities across the UK.
“We continue to invest to make BT more competitive and I’m pleased to see the quality of our products and services improving. At the same time we are firmly on track with the delivery of our modernisation programme and have delivered £352m in cost savings in the first half of the year.
“This performance has given us confidence to raise the lower end of our EBITDA outlook range for this year and publish an EBITDA expectation of at least £7.9bn for 2022/23, with sustainable growth from this level forward. This growth will be driven by the continued recovery from Covid-19, enhanced by sales of our converged and growth products, and by significant savings from our modernisation and cost saving programme. In combination these factors will more than offset legacy product declines.”