BT revenues dip on ‘tough’ trading conditions but profits top £1.3bn following joint venture deal
- BT’s adjusted revenue fell to £15.6bn for the nine months ending December
- The firm’s profits grew by 49% to £1.3bn for the latter nine months of 2022
- It is embarking on a programme to slash costs by £3bn by the end of 2025
BT Group’s profits climbed by almost half following the sale of a large stake in its pay sports television network.
The telecoms giant reported post-tax profit growth of 49 per cent to £1.3billion for the latter nine months of 2022, even as total revenue fell by 3 per cent to £15.6billion, due primarily to weaker trade in its enterprise and global divisions.
Declining legacy product purchases and the migration of a mobile virtual network operator hit demand in the former segment, while the latter was affected by lower strategic equipment orders.
Earnings: BT saw profits grow by 49 per cent to £1.3billion for the latter nine months of 2022
Over the same period, BT’s consumer-facing business saw revenues flatline as the divestment of a 50 per cent stake in its pay television sports network offset growth in mobile and fixed service sales.
BT described this as ‘strong performance in tough market conditions’.
Nonetheless, the company’s decision to form a joint venture with Warner Bros. Discovery helped boost the division’s underlying earnings by 15 per cent, as did the boost in its fibre-to-the-premises customers.
It credited the high interest in next-generation products for driving a record 155,000 consumers to its full-fibre products in the final three months of 2022.
During the third quarter, the group’s digital network arm Openreach also added a record 810,000 premises to its network and reached 38 per cent of its target of reaching 25 million homes and businesses.
Openreach was the only one of BT’s four main divisions to report an increase in revenue, thanks to solid demand for fibre-enabled products and Ethernet, as well as price hikes.
From late March, the FTSE 100 business intends to raise its monthly broadband prices by around 15 per cent, reflecting the need to invest in upgrading its network and rising costs.
Much of the inflationary pressures derive from surging energy costs, which are expected to cost BT an extra £200million this financial year.
As a result, the firm is embarking on a programme to slash costs by £3billion by the end of 2025, a £500million increase on the original goal.
At least £100million of savings is set to come from the merger of its enterprise and global divisions into a new unit called BT Business, which the firm said will deliver greater supply chain efficiencies.
But soon after announcing the intended combination, the firm agreed to a £1,500 pay increase for staff earning up to £50,000 from January, equivalent to 85 per cent of its workforce, in response to industrial action that began in the summer.
Adam Vettese, an analyst at eToro, said: ‘While this might take some heat off management, the firm is also seeing its debt increase, up nearly £1.5 billion year-on-year.
‘In a low-interest-rate environment, this is possibly not a major issue, but rates are rising, so servicing rising debt levels is going to prove most costly for the business.’
BT’s net debt stood at £19.2billion in December, approximately £1.8billion higher on the same point last year following pension contributions and dividend payouts.
BT Group shares were 2 per cent higher at 126.4p on late Thursday morning, although their value has still declined by more than a third in the past 12 months.