BT Group revenue falls 3% despite Openreach growth; shares down

Investing.com -- BT Group (LON:BT) on Thursday reported a 3% year-on-year decline in third-quarter revenue to £5.2 billion, citing weak performance in its Global and Portfolio business units, as well as a slowdown in handset trading, sending its shares down over 3%. 

The revenue drop, which the company attributed to challenging non-UK trading conditions, overshadowed the continued growth of its fibre broadband unit, Openreach. 

The telecom giant continues to expand its full-fibre network at a record pace, passing over one million premises for the fourth consecutive quarter. 

Openreach’s FTTP (fibre to the premises) footprint now covers 17 million homes, more than half of the UK, with a goal to reach 25 million by December 2026. 

The division also saw record customer demand, adding 472,000 new fibre customers in the quarter, bringing total connections to six million. 

However, Openreach’s total broadband lines declined by 208,000, largely due to competitor gains in areas where BT has yet to roll out FTTP.

Openreach broadband revenue showed resilience, with average revenue per user (ARPU) rising 6% year-on-year to £16.1, driven by increased FTTP adoption and higher-speed plans. 

Meanwhile, BT’s consumer division saw modest service revenue growth of 0.4%, reversing a 1.3% decline in the first half of the fiscal year. 

However, this was offset by a 12% drop in equipment revenue, primarily from weaker handset sales. 

The consumer broadband base shrank by 40,000 quarter-on-quarter, while the postpaid mobile customer base remained largely stable, declining by just 4,000. 

Consumer broadband ARPU fell 1.2% to £40.6, while postpaid mobile ARPU rose 5.7% to £20.3.

In the mobile segment, BT expanded its 5G standalone coverage, adding 16 new locations and bringing the total to more than 30 major UK towns and cities. 

The company’s EE brand retained its position as the UK’s top mobile network for a tenth consecutive year, according to testing by industry benchmarking firm umlaut.

BT’s business division reported stable revenue from its core UK operations. The company signed a £1.3 billion contract with the Home Office to continue providing mobile services for the Emergency Services Network over the next seven years.

Despite the revenue decline, BT maintained profitability through cost-cutting measures. Adjusted EBITDA rose 4% to £2.1 billion, driven by cost efficiencies and a one-off income boost in the low tens of millions. 

The company has reduced energy usage in its networks by 3% year-to-date and cut total labour resources by 3% to 117,000 employees. Openreach also reported an 11% drop in repair volumes, reflecting improvements in network maintenance.

Profit before tax came in at £427 million, up 1% from the previous year, as EBITDA growth offset higher net finance costs and increased depreciation and amortisation.

BT reaffirmed its full-year financial outlook and mid-term guidance, stating that its cost transformation programme remains on track.

The company also reported an improvement in customer satisfaction, with its Net Promoter Score rising 4 points in the quarter to 29.6.