- Average revenue per customer increases
- But the total customer base is falling
It is more of the same for BT (BT.) – growth has slowed to a standstill and now increased revenue is primarily coming through price rises rather than an increase in customer numbers.
In the nine months to December 2023, adjusted revenue grew 3 per cent to £15.8bn. The majority of this came from its Openreach business, which was up 7 per cent in the period due to price rises and a higher number of fibre-optic customers.
Openreach is where all the investment in ultra-fast broadband is going. This rollout is continuing, with another 950,000 premises added in the last quarter. It now reaches 13mn premises, with another 6mn under way. In the last quarter, it added another net 423,000, bringing the total number of connected premises to 4.4mn.
Across the whole division, though, including the older connections, Openreach lost 369,000 connections. The company has been pushing through double-digit price increases so, presumably, more cost-conscious customers have been looking elsewhere.
Switching out lower-value customers has pushed up Openreach average revenue per customer by 10 per cent. Correspondingly, Openreach’s average cash profit (Ebitda) rose 11 per cent, but higher “input costs” meant group cash profit was up just 3 per cent.
It’s not a bad performance, and management has maintained guidance for the full year. The hope will be that cash flow will improve as inflation falls and more customers switch to fast fibre-optics. Customer growth has slowed, but BT will keep squeezing those that remain.
Last IC view: Buy, 120p, 02 Nov 2023
