02 November 2023
If you are covering BT’s latest results, please see the following comment from Matt Dorset, equity research analyst at Quilter Cheviot:
"BT has demonstrated a robust performance in its latest financial results, showcasing a 2% year-over-year (YoY) increase in revenue, surpassing consensus expectations by 0.5%. Even more impressive is the 3% YoY rise in earnings (EBITDA), outpacing the consensus by 1.3%. Additionally, the company has reported lower capital expenditures, contributing to free cash flow that is approximately £200 million above the consensus forecast.
"Openreach has been a particular standout within BT's portfolio, delivering an 8% growth in revenue and an 11% increase in earnings (EBITDA). This success can be attributed to consumer price index (CPI) linked price increases and an expansion in the fibre broadband customer base. However, the Consumer segment did not meet consensus expectations, with revenue up by 3% and earnings (EBITDA) by 4%, which were driven by robust average revenue per user (ARPU) and an uptick in fibre connections.
"BT's fibre network expansion has been notable, with a record 860,000 homes passed this quarter. This aggressive rollout means that now 12 million homes across the UK have access to fibre broadband, underscoring BT's commitment to enhancing digital infrastructure.
"Nevertheless, the results weren't without their concerns. A slight negative is also the increased line losses at Openreach, which have exceeded the full-year (FY) guidance rate. BT has acknowledged the possibility that these losses could surpass the FY guidance due to a softening in the UK market, including a slowdown in home construction. Despite these challenges, the company has opted to maintain its guidance for the time being.
"In terms of shareholder returns, BT has decided to keep the interim dividend unchanged. In a strategic move likely to be well-received by investors, BT has lowered its capital expenditures guidance and is now projecting a free cash flow of £1.2 billion. This revision indicates a prudent approach to investment and a focus on cash generation amidst a complex market environment."
