BT has confirmed changes to its management, after reporting a sharp fall in first-quarter earnings due to charges for its accounting scandal in Italy and flat revenues.
Marc Allera, the CEO of mobile operator EE, is taking over as the new Consumer chief from September, replacing John Petter, who is leaving the company after 13 years. From next year EE and Consumer will be merged to form one new consumer-facing division.
BT also confirmed that chief strategy officer Sean Williams is leaving the group. Cathryn Ross, the current CEO of UK water regulator Ofwat, will take over his responsibilities as head of regulatory affairs, from next January.
The reshuffle comes as BT continues to struggle with the fall-out from its accounting scandal. Net earnings fell 51 percent in the fiscal first quarter to June to 2.9 pence, and pretax profit was down 42 percent to GBP 418 million. This included one-time charges of GBP 337 million, including GBP 225 million to Orange and Deutsche Telekom to compensate them for the drop in value of their shares in BT since the problems emerged in Italy.
BT's revenues rose 1 percent to GBP 5.837 billion, led by the consumer business and positive currency effects. BT said the UK public sector and international corporate markets remained difficult. Underlying revenue excluding transit was up just 0.2 percent. Adjusted EBITDA fell 2 percent from a year ago to GBP 1.785 billion, hurt by increased pension costs, business rates, sport programme rights and increased customer investment.
The UK operator maintained its outlook for stable underlying revenues over the full year, annual adjusted EBITDA of GBP 7.5-7.6 billion and normalised free cash flow of GBP 2.7-2.9 billion. The latter figures was up 24 percent in Q1 to GBP 556 million.
At BT's Consumer division, quarterly sales rose 7 percent from a year ago to GBP 1.255 billion. Retail fibre broadband customers rose by 170,000 in the quarter to 5.1 million, and BT estimates it took 53 percent of net adds in the market. TV subscribers increased by 8,000 compared to March to 1.8 million, with all customers now using YouView. BT said it passed the milestone of an average 2.0 revenue-generating services per customer, and ARPU rose to GBP 40.8 from GBP 37.8 a year ago.
At EE, revenues were up 4 percent to GBP 1.291 billion, and adjusted EBITDA jumped 19 percent to GBP 335 million. The mobile operator added 210,000 postpaid customers in the quarter, for a total 17.0 million, while prepaid users fell by 385,000 to 6.5 million. Of the total 29.8 million customers, 19.0 million used 4G. Monthly ARPU increased 9 percent to GBP 20.4, with postpaid up 2 percent to GBP 26.6 and prepaid growing 12 percent to GBP 4.6. BT said postpaid churn remained low at 1.1 percent.
Global Services reported sales flat at GBP 1.244 billion, and order intake fell 16 percent to GBP 0.8 billion. EBITDA dropped 39 percent to GBP 73 million and fell 27 percent when excluding the Italian activities. BT said it's reviewing the sales operating model at Global Services, with the aim of shifting to a more digital set-up. The two-year process is expected to result in one-time costs.
