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Pandemic dampens BT's Q1s

Lower levels of BT Sport revenue and a lull in business activity
July 31, 2020

BT’s (BT.A) revenues dropped 7 per cent in the first quarter to £5.2bn, as the telecoms giant grappled with lower levels of income from BT Sport and a lull in business activity following the outbreak of coronavirus. 

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The telecoms group's consumer business suffered a 15 per cent blow to adjusted cash profits, as the wipe-out of televised sports hit sales from both pubs and residential customers. Consumer fixed-line average revenue per customer (ARPC) dipped 4 per cent year on year, which BT attributed in part to tougher competition. Mobile ARPC fell 5 per cent, led by a decline in roaming and out of bundle sales, as well as a trend towards SIM-only purchases. Still, customer churn for both segments was down 1 per cent, as switching activity dwindled during lockdown. 

For enterprise, BT’s second largest customer-facing unit, adjusted revenues dropped by almost a tenth. This was primarily because of ongoing declines in legacy products, as well as a sharp drop in business activity following the emergence of the pandemic.

BT's infrastructure wing Openreach posted some modest growth in the quarter, with progress in higher rental bases in fibre and ethernet tempered by a decline in legacy products and price reductions. The group noted that while fibre-to-the-premises (‘FTTP’) was initially impacted by lockdown, it has started to rebound; 10,000 orders were placed in just one week in June. 

But coronavirus weighed on the group’s normalised free cash flow, pushing it down by £372m to an outflow of £49m. No small issue, given that BT has estimated it could cost £500m to strip Huawei technology out of its networks. 

Chief executive Philip Jansen said in a statement that it is clear the pandemic will continue to impact BT “as the full economic consequences unfold”. But the group did issue guidance for the current 2020/2021 financial year,  expecting a 5-6 per cent dip in adjusted  revenues and adjusted cash profits in the range of £7.2bn - £7.5bn.