BT Earnings Up as Revenue Jumps -- Update
July 28 2016 - 8:00AM
Dow Jones News
(Rewrites, adds detail.)
By Simon Zekaria
LONDON--BT Group PLC (BT.A.LN) on Thursday recorded a
forecast-beating jump in quarterly earnings on higher revenue, as
more customers took up the telecomms giant's media services
including its newly-acquired mobile business EE.
Pretax profit for the quarter to June 30 on an adjusted basis
increased 16% year-over-year to 802 million pounds ($1.06 billion),
ahead of consensus market expectations. Adjusted earnings before
interest, taxes, depreciation and amortization totaled GBP1.82
billion, up 25%. Revenue on an adjusted basis soared 35% to GBP5.78
billion.
"We've made a good start to the year," said Chief Executive
Gavin Patterson.
In the U.K.'s competitive industry for combined media
services--where BT competes with companies like Sky PLC (SKY.LN),
Liberty Global PLC's (LBTYA) Virgin Media and TalkTalk Telecom
Group PLC (TALK.LN)--the telecoms incumbent is spending heavily on
fiber-optic broadband as well as television content including
Premier League and Champions League soccer.
By division, consumer revenue rose 9%, while revenue from BT's
business and public sector division increased 18%.
BT said it remains on track to deliver on its full-year outlook.
It expects growth in fiscal 2017 revenue and adjusted Ebitda to
total around GBP7.9 billion.
It also forecast at least 10% growth in dividend and a share
buyback worth GBP200 million.
At 1053 GMT, shares had risen 3% to 414 pence as investors
reacted positively to the results. "BT has acted decisively to
target the quad-play market that large telecoms are currently
chasing," said Hargreaves Lansdown analyst George Salmon.
Mr. Patterson downplayed the impact of Brexit on the fortunes of
the group. The U.K.'s vote to the leave the European Union last
month sparked fears that the country would enter into an economic
downturn amid consumer uncertainty, but the CEO said the company
performs resiliently during recessionary times as customers stay at
home more and use media services.
Still, Mr. Patterson said BT may focus on markets outside Europe
in a post-Brexit Britain, without elaborating, should the
fundamental characteristics of the economy change.
Separately, Mr. Patterson said the company is eager to strike a
negotiated deal with Ofcom after the U.K. communications regulator
this week called on BT's infrastructure division Openreach to be
legally separated from the rest of the company. BT rejects that
idea, and other plans for the division by Ofcom, and says there are
"points of difference" between the position of the regulator and
BT.
Resolving the matter quickly would allow the company to make
necessary investment in the U.K.'s network, he said.
"There is a lot at stake here," he told reporters.
Write to Simon Zekaria at simon.zekaria@wsj.com. Tapan Panchal
contributed to this article.
(END) Dow Jones Newswires
July 28, 2016 07:45 ET (11:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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