BT Group has announced a rapid acceleration of its FTTP network build, setting a new target of reaching 20 million premises by mid-to-late-2020s, with a significant build in rural areas. This will be supported by a GBP 12 billion investment spend. The announcement was made as BT reported revenue of GBP 22.90 billion for the year to 31 March 2020, down 2 percent (reported basis) on the impact of regulation, declines in legacy products, strategic reductions in low-margin business and divestments.
Adjusted EBITDA for the year was GBP 7.91 billion, down 3 percent, due to lower revenue and investment in customer experience, offset partly by cost savings from the transformation programmes. The GBP 1.6 billion Phase 1 transformation programme is now complete. The next phase is expected to deliver annualised gross benefits of GBP 1 billion by March 2023 and GBP 2 billion by March 2025, with a GBP 1.3 billion one-off cost to achieve in total over the five years. Reported profit before tax for the year was lower at GBP 2.35 billion, including charges of GBP 95 million as a result of Covid-19 mainly reflecting increased debtor provisions.
BT also confirmed that it was suspending the final dividend for 2019/20 and all dividends for 2020/21 to create capacity for investments and managing the company through the Covid-19 crisis. It expects to resume dividend payments in 2021/22 at an annual rate of 7.7p per share. Group CEO Philip Jansen said that Covid-19 was affecting the business, with the full impact would becoming clearer as the economic consequences unfold over the next 12 months. As a result of Covid-19, BT will not provide guidance for 2021/21 at this time.
BT said its FTTP network now passes 2.6 million premises across the UK after passing 1.3 million premises in 2019/20, with the roll-out at around 32,000 premises per week. It is aiming to pass more than 2 million in 2021/21 to reach 4.5 million by March 2021, and envisages a maximum build rate of 3 million premises per year with its new accelerated network build target. The FTTP investment is expected to deliver pre-tax nominal returns of 10-12 percent.
BT said that 5G was now live in 80 cities and towns across the UK, and is aiming to more than double this footprint by March 2021. Consumer fixed ARPC was GBP 38.10 for the year, down 2 percent year-on-year; with post-paid mobile ARPC of GBP 20.40, down 2 percent on the impact of regulation and continued trend towards SIM-only. Post-paid mobile churn improved to 1.1 percent quarter-on-quarter, with fixed churn improving 1.3 percent year-on-year.
Total RGUs per address reached 2.38. The BT Halo converged product now accounts for more than 30 percent of the BT consumer broadband base. Capital expenditure for the year was up GBP 193 million to GBP 3.96 billion, excluding BDUK funding deferral, driven by network and customer investment. BT completed 0.7 million fibre-enabled broadband net connections in Q4, and more than 2.4 million for the full year. A total of 14.6 million customers are now connected to fibre-enabled products, with the Openreach superfast fibre broadband network now passing over 28.4 million premises.
The Consumer division had adjusted revenue of GBP 10.39 billion for the year, down 2 percent from GBP 10.59 billion a year earlier, with adjusted EBITDA of GBP 2.43 billion, down 5 percent from GBP 2.56 billion. The Enterprise division had adjusted revenue down 5 percent to GBP 6.09 billion, from GBP 6.40 billion, with adjusted EBITDA of GBP 1.96 billion, down 3 percent from GBP 2.03 billion. The Global services division saw revenue fall 8 percent to GBP 4.36 billion, from GBP 4.73 billion a year earlier, as adjusted EBITDA increased 5 percent to GBP 634 million, from GBP 604 million. Revenue at Openreach was up 1 percent to GBP 5.11 billion, from GBP 5.07 billion, with adjusted EBITDA down 3 percent to GBP 2.86 billion, from GBP 2.93 billion.
In the fourth quarter, Consumer revenue was down 4 percent year-on-year to GBP 2.49 billion; with Enterprise revenue down 3 percent to GBP 1.54 billion; Global services revenue down 10 percent to GBP 1.08 billion; and Openreach revenue up 2 percent to GBP 1.30 billion. Total group revenue for the quarter was GBP 5.63 billion, down 4 percent from GBP 5.85 billion in the year-earlier quarter, with group adjusted EBITDA of GBP 2.01 billion, down 1 percent from GBP 2.03 billion a year-earlier.
