30 January 2025
If you are covering BT’s Q3 trading update, please find commentary below from Matt Dorset, equity research analyst at Quilter Cheviot:
"BT's Q3 results were a mixed bag. Revenue fell by 3%, missing consensus expectations, largely due to tough trading conditions outside the UK and weaker handset sales. However, there was a silver lining as operating profit (EBITDA) rose by 4%, surpassing expectations thanks to robust cost control measures.
“BT's ongoing cost transformation is noteworthy, with a 3% reduction in energy consumption on its networks, a 3% cut in total labour resources and an 11% drop in Openreach repair volumes. These efforts are clearly paying off.
“Key performance indicators also presented a mixed picture. On the bright side, BT's fibre rollout is progressing rapidly, with over one million homes passed in the quarter for the fourth consecutive time, bringing the total to more than 17 million. Additionally, net fibre additions accelerated to 472,000.
“On the downside, broadband line losses remained high at 208,000, attributed to weak house building and increased competition. However, BT's efforts to enhance customer experience are evident, with a 4.0-point increase in net promoter score to 29.6.
“BT has reiterated its full-year guidance and long-term free cash flow targets. From a valuation perspective, BT remains attractive at 4.2 times operating profit (EV/EBITDA), with significant cash flow improvements expected as capital expenditures decline post-fibre rollout."
