BT Group (BT.A)

 

BT's adjusted earnings fall

BT Group's adjusted EBITDA fell by 2% to £1,785m in the first quarter due to increased pension costs, business rates, sport programme rights and its investment in customer experience.

Reported revenues were up 1% at £5,837m and underlying revenue was up 0.2%.

Other highlights:

- Settlement of warranty claims with Deutsche Telekom and Orange under EE acquisition agreement, arising from the previously reported issues in Italy, with specific item charge of £225m

- Net cash inflow from operating activities of £1,315m down £19m, and normalised free cash flow1 of £556m up £108m due to working capital phasing

- Outlook maintained with share buyback of £200m in the quarter Chief executive Gavin Patterson said "BT has delivered an encouraging performance in the first quarter of the year. We've made good progress in our key areas of strategic focus: deliver great customer experience, invest for growth, and transform our costs.

"In particular, I'd highlight the growth achieved by our consumer facing businesses, helped by mobile.

"BT, with Openreach, is well placed to support the roll out of FTTP in the UK, and we're consulting with Ofcom, Government and other communications providers to build the investment case to achieve this outcome.

"Our new Consumer business will operate our three distinct brands; BT, EE and Plusnet; to leverage our position as the largest and only fully converged player in the market, spanning fixed and mobile networks, consumer products and services as well as content. "We will continue to simplify and streamline the business and rationalise our costs as demonstrated by our ongoing performance transformation programme. Our businesses are leaders in their core segments and as we drive the business forward I am confident in the outlook for our Company."

The group also announced organisational changes to simplify its operating model, strengthen accountabilities and accelerate its transformation. Marc Allera, currently CEO of the EE business acquired last year by BT, has been appointed to lead a newly created Consumer business, bringing together BT's Consumer and EE businesses. The new Consumer business will operate across three distinct brands - BT, EE and Plusnet - and will span fixed and mobile networks, consumer products and services, and content.

Cathryn Ross, chief executive of Ofwat, has been appointed new director of regulatory affairs.

Ross is expected to take up her role in January 2018.

After almost four years as CEO of BT Consumer, and 13 years in BT, John Petter has announced he is stepping down to pursue roles outside the Group.