Fibre build accelerates, pre-tax profits fall by £18 million to £831 compared with H1 last year
BT Group’s CEO, Philip Jansen (pictured), used its earnings report today to announce an increase in its cost savings target and to increase prices in line with inflation in 2023.
Jansen intends to ‘find’ a further £500 million in efficiency savings by the end of 2025, a 20% increase to the target of £2.5 billion set out by him when he became CEO in 2019. (Read more about this in our recent, exclusive interview with BT’s Alex Bell).
BT will increase its capital expenditure as it races to build out FTTP infrastructure. According to its first half earnings report, BT has passed 8.8m premises with fibre, including 2.8m in rural areas, with initial build underway on a further 6 million premises. Its weekly build rate averaged 62,000 premises in Q2. Overall, its FTTP connections are ahead of plan and Q2 saw 331,000 net additions, with a total take-up of 27%.
BT has been careful to stress that saving will come from a more efficient supply chain and better products, rather than its 100,000-strong group workforce, whose relationship with its employer is already strained.
The two parties are locked in a dispute over the pay package offered by BT in April which saw about 40% of its workers strike in October in an attempt to force renegotiation. Unions accuse management of offering flat-rate rise when inflation is soaring.
In the half-year to end of September, BT reported revenues of £10.4 billion, up by 1% due to growth in Consumer and Openreach, “which partially offset legacy declines in large corporate customers in Enterprise, lower equipment sales in Global and the impact of the BT Sport disposal”.
The consumer division’s earnings increased 20% to £670 million but its enterprise division continues to flounder, falling 18% in adjusted earnings before interest, taxes, depreciation and amortisation.
Overall profits before tax are £831 million for H1, down by £18 million from the same period last year.
BT’s share price continues to fall. They are currently £117.20 – having lost just over a quarter of their worth this year and down from a peak of £961.71 on 18 December 1999.
BT has already increased its mobile and fixed broadband prices by 3.9% above the consumer price index this year.