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Highlights
- Record FTTP Expansion: BT achieved a record FTTP (fiber-to-the-premises) build rate, with 2.1 million added in H1, passing 16 million premises as of October. FY25 build target increased to 4.2 million premises due to cost efficiencies, keeping BT on track to hit 25 million by 2026.
- Strong Demand for Openreach FTTP: Openreach saw record net additions of 446,000 in Q2, with total FTTP connections at 5.5 million and a high take-up rate of 35%. FTTP growth helped reduce repair volumes and support EBITDA improvement.
- Consumer and Business Growth: Retail FTTP base grew 35% YoY, reaching 3.0 million (2.8 million in Consumer, 0.2 million in Business). The 5G customer base also expanded by 25% to 12.5 million.
BT Group (LSE:BT.A) has reported impressive growth in its fiber-to-the-premises (FTTP) network during the first half of 2024, with a record 2.1 million FTTP premises added. By October, BT’s FTTP network had reached 16 million premises, covering approximately half of the UK. The company has raised its full-year 2025 target for FTTP builds to 4.2 million premises, leveraging cost efficiencies to stay on track for a 25 million premises target by December 2026. This continued expansion underpins BT’s commitment to transforming the UK’s broadband infrastructure.
Strong Demand for Openreach FTTP
Openreach, BT’s wholesale broadband arm, saw record net additions of 446,000 FTTP connections in Q2. Total FTTP connections stood at 5.5 million, with a market-leading take-up rate of 35%. This surge in FTTP adoption not only boosted revenue but also helped reduce repair volumes, which dropped by 0.3 million to 3.0 million, further contributing to improved margins and EBITDA growth. The growth in FTTP has been a key driver of BT’s improved financial performance, as customers move to higher-speed, more reliable fiber connections.
Consumer and Business Growth Continue
BT also saw growth in its retail business, with its FTTP customer base growing by 35% year-on-year, reaching 3.0 million in total (2.8 million in Consumer and 0.2 million in Business). The company also expanded its 5G customer base by 25%, now totaling 12.5 million. However, BT’s Consumer broadband base showed a slight decline, down 377,000 lines, reflecting continued competitive pressures in the broadband and new homes markets.
Financial Performance Reflects Cost Transformation and Challenges in Global Markets
BT’s financial results for the first half of FY25 were mixed. Adjusted revenue totaled £10.1 billion, a 3% decline compared to the previous year, primarily due to weaker trading conditions in non-UK markets within its Global and Portfolio channels. However, the company’s adjusted EBITDA rose by 1% to £4.1 billion, driven by cost transformation and operational efficiencies. Reported profit before tax declined by 10% to £1.0 billion, largely due to the lower revenue and higher finance costs, although this was partially offset by reductions in operating costs.
Capital expenditure decreased by 2% to £2.3 billion, reflecting cost-saving measures in FTTP rollouts. Additionally, BT generated a net cash inflow of £3.0 billion from operating activities, demonstrating the company’s strong cash generation capabilities.
Cost Savings and Labor Efficiency Drive Margin Improvement
BT’s cost-saving initiatives continued to make a significant impact, with £433 million in gross annualized savings achieved during the first half of the year. The company also reduced its labor force by 2,000 employees, bringing total staff down to 118,000, a 4% reduction from the previous year. These cost reductions were key to the company’s margin improvement and helped offset some of the challenges faced in its non-UK operations.
Improved Customer Satisfaction and Dividend Increase
BT’s customer satisfaction levels also saw an improvement, with its Net Promoter Score (NPS) rising by 3.1 points year-on-year to 25.6, reflecting the company’s efforts to enhance the customer experience. BT’s board also declared an interim dividend of 2.40 pence per share, an increase from 2.31 pence per share in the previous year, in line with the company’s dividend policy of paying 30% of the prior year’s full-year dividend.
Guidance for FY25 and Mid-Term Outlook
Looking ahead, BT has reiterated its guidance for FY25, with expectations for adjusted EBITDA, capital expenditure, and free cash flow to remain on track. However, the company revised its revenue outlook for FY25, now expecting a 1-2% decline in revenue, primarily due to softer trading in its non-UK markets and a decline in low-margin kit sales.
For the mid-term, BT is targeting sustained revenue and EBITDA growth, supported by continued cost transformation. The company plans to keep capital expenditure under £4.8 billion until FY26, with a reduction of approximately £1 billion post-FTTP peak. BT also expects normalised free cash flow to reach around £2.0 billion by FY27, growing to £3.0 billion by the end of the decade.
