BT has increased its its total FTTP network build target from 20 million to 25 million premises by December 2026, with Openreach working to connect up to 4 million premises a year. BT said it could fund this increased roll-out from internal resources while still committing to other priorities, including investment in the 5G network, its modernisation programme, supporting the BT Pension Scheme, and reinstating its dividend.
BT is open to forming a joint venture with external partners to fund these additional 5 million premises, and will explore JV opportunities over the first half of the current financial year. BT Group CEO Philip Jansen said this accelerated roll-out would create up to 7,000 new jobs, connect more communities, including those in rural areas, and help drive the UK's economic recovery from the pandemic.
The announcement comes as BT reported revenue of GBP 21.33 billion for the year to 31 March 2021, down 7 percent, primarily due to the impact of Covid-19 on the consumer and enterprise units, continued legacy product declines and divestments, offset partially by higher equipment revenue and Openreach fibre and Ethernet bases. Adjusted revenue was down 6 percent in line with expectations. Adjusted EBITDA was 6 percent as expected to GBP 7.41 billion, mainly due to the fall in revenue, special bonus for frontline workers, higher service costs and continued investment in fibre, offset partially by sports rights rebates and cost savings from the modernisation programme. Reported profit before tax was down 23 percent to GBP 1.80 billion on lower EBITDA.
Capital expenditure for the year was GBP 4.22 billion, up 6 percent on increased network and equipment investment. Net cash inflow from operating activities was GBP 5.96 billion, with normalised free cash sow down 27 percent to GBP 1.46 billion. There is no final dividend for 2021/21, but payments will resume in 2021/22 at 7.7 pence per share. For 2021/22, BT is forecast adjusted revenue to be broadly flat year-on-year, with adjusted EBITDA of GBP 7.5-7.7 billion, capital expenditure of around GBP 4.9 billion, and normalised free cash flow of GBP 1.1-1.3 billion.
Openreach's FTTP network build reached 2 million new premises in FY 2020/21, with record build levels in Q4. FTTP connections increased by 73 percent over the last 12 months to 905,000. The 5G footprint has doubled to 160 locations over the last year, with the 5G-ready customer base reaching over 3.2 million. The FTTP customer base reached 753,000 in Q4, up 67,000 from Q3, with broadband churn at 1 percent in Q4. The BT Halo converged customer base reached 2.8 million in Q4, growing by over 1 million in the year. Average revenue per customer (ARPC) per month was GBP 35 in Q4 for fixed, GBP 37 for broadband, GBP 18.10 for post-paid mobile and GBP 7.70 for pre-paid mobile.
BT has also agreed a pension valuation with the BT Pension Scheme (BTPS), which had a funding deficit of GBP 7.98 billion at end-June 2020, down from GBP 11.3 billion at end-June 2017. This reduction was driven by GBP 4.5 billion of deficit contributions and lower assumed life expectancies, offset partially by an allowance for the reform of the RPI. BT and BTPS have agreed a further deficit repair plan with two elements - GBP 2 billion of deficit to be met through an asset back funding arrangement over 13 years with annual cash payments of GBP 180 million a year, secured against the EE business; and the rest of the deficit being met over the existing 10-year period with annual cash payments falling from an initial GBP 900 million to GBP 600 million from 01 July 2024.
