BT suffers revenue decline despite cost-cutting measures
- BT reported a 3% decline in adjusted revenue to £4.9 billion in the three months to 30 June.
- The company's Consumer division saw a sales drop, while Openreach's sales increased due to strong demand.
- Despite the challenges, BT's CEO described the performance as a solid start to the year with confidence in future growth.
In the United Kingdom, BT Group plc recently announced its financial results for the quarter ending on June 30, revealing a continued downturn in sales and earnings. The company reported that adjusted revenue dropped by 3%, totaling £4.9 billion, primarily influenced by reduced handset sales in its Consumer division and ongoing difficulties in international markets. Despite these challenges, BT attributed some of the financial impact to their successful cost-cutting initiatives, which effectively mitigated the effects of lower revenues on overall earnings. In its Consumer division, BT experienced an adjusted sales decline of 3%, amounting to £2.3 billion, paralleling a similar decrease in adjusted EBITDA to £636 million. The company’s Business division faced an even steeper decline, with earnings falling by 9% to £344 million as adjusted revenues dropped by 6% to £1.8 billion. This negative performance occurred despite a slight growth in BT's broadband and post-paid mobile customer base, reflecting the ongoing struggles within the company’s core markets. BT’s Openreach infrastructure division showed more resilience, posting a 1% increase in adjusted sales to £1.6 billion and a 5% rise in adjusted EBITDA to £1.1 billion. Openreach capitalized on record demand, as evidenced by net additions reaching 566,000 during the quarter, a 46% year-on-year increase. This growth can be largely credited to BT’s ongoing full-fibre broadband rollout, which has made advancements well ahead of schedule, reaching 19 million homes and businesses thus far. BT's 5G mobile network now covers 87% of the UK population, indicating substantial investment in technological infrastructure. Despite the challenges posed by reduced revenues and increased finance costs, BT's chief executive, Allison Kirkby, characterized the current performance as a “solid start to the year.” She highlighted ongoing customer demand for next-generation broadband and mobile connectivity over all their brands as a positive sign. Kirkby reiterated that BT's investment in national networks is unparalleled, aiming to enhance customer connections and meet strategic targets within the next several years. Analysts pointed to BT’s diligent focus on streamlining operations and cutting costs as effective measures that have begun to yield positive results, such as better customer retention rates and reduced churn. However, concerns remain about BT’s large debt and pension deficit, challenges that the company now appears better equipped to manage compared to previous years. The performance in this quarter suggests a complex landscape for BT, as it navigates the demands of its business while keeping an eye on future growth opportunities.