Report Overview

BT UK: Promising future, but investment required

BT is accelerating its ‘full fibre’ rollout, likely due to a combination of a successful build to date, very promising regulatory developments, and (let’s not deny it) worrying competitor build plans

Full year results were a little weak versus consensus, with guidance a little soft as well, leading to questions of how this can be funded, particularly the roll-out acceleration from 2021/22 to cover half the country by the mid-2020s

Whatever the funding mechanism, we regard the investment as sound, with BT’s planned operational transformation also promising but potentially requiring further upfront investment

Contents

Revenue growth steady at the Group level

Broadband hit by pricing effects

Mobile is mixed

Openreach’s future is strong, but requires investment

The short term outlook is muted, but there are good growth prospects further out

Longer term financing questions

List of charts/tables

Figure 1. Head and tailwinds for BT

Figure 2. Underlying revenue growth

Figure 3. BT Group revenue and EBITDA growth

Figure 4. Broadband net adds (000)

Figure 5. BT Consumer operating performance

Figure 6. BT pricing changes for existing customers (£/month)

Figure 7. Broadband entry level dual-play pricing, new customers (£/month)

Figure 8. Broadband high speed pricing, new customers (£/month)

Figure 9. BT’s mobile operating performance

Figure 10. Openreach FTTC ARPU (£)

Figure 11. Fibre take-up (FTTx)

Figure 12. Openreach ultrafast coverage net adds (000s of premises)

Figure 13. Premises passed by Altnet FTTP (m)

Figure 14. BT Group guidance

Figure 15. Incremental headwinds to EBITDA

Figure 16. BT net debt to EBITDA