5th May 2016 10:26
LONDON (Alliance News) - BT Group PLC on Thursday reported a rise in pretax profit for its most recently ended financial year, and set out its guidance for the next two years, as the FTSE 100 telecommunications firm outlined plans to invest around GBP6 billion in broadband and 4G coverage in the UK over the next three years.
BT reported a pretax profit of GBP3.03 billion for the year to end-March, up from GBP2.65 billion the year before, as revenue rose to GBP19.04 billion from GBP17.98 billion.
Revenue was helped by growth in the company's BT Consumer business, as well as a GBP1.06 billion contribution from EE. In the fourth quarter BT Consumer revenue was up 8%, helped by 94,000 retail broadband customer additions, and 66,000 television customer additions.
BT reported earnings before interest, tax, depreciation and amortisation of GBP6.37 billion, up from GBP6.02 billion. BT said it expects to report Ebitda of around GBP7.9 billion in the coming financial year, and further growth in the year after.
The company said its normalised free cash flow, which excludes EE, pension deficit payments and other specific items, was GBP2.84 billion, ahead of its guidance of GBP2.8 billion. It also outlined free cash flow expectations of between GBP3.1 billion and GBP3.2 billion in its coming year, growing to GBP3.6 billion in the following year.
BT proposed a full-year dividend of 14.0 pence per share, up 13% from 12.4p the year before. It said it expects to grow its dividend by more than 10% in each of the next two financial years.
The company said the integration of its acquisition of mobile operator EE Ltd, which was cleared by regulators earlier this year, is going well, and it now sees the opportunity for more synergies than it originally expected and at a lower cost. BT now expects cost synergies to reach a run-rate of around GBP400 million per year in the fourth full year of ownership, ahead of its previous expectation of GBP360 million, of which it expects to realise GBP100 million in the year ahead.
The company also now expects the cost of integrated EE to be lower at around GBP550 million.
BT also set out plans to invest further in the UK, saying its Openreach and EE businesses will make around GBP6 billion in capital expenditure over the next three years in the first phase of a plan to extend superfast broadband and 4G coverage beyond 95% of the country by 2020.
Ultrafast broadband will be deployed to a minimum of ten million homes and businesses, with an ambition to reach twelve million, the company said. Within this will be an increased focus on fibre-to-the-premises technology, mostly for new housing developments, high streets and business parks, with the rest being deployed via BT's upgrade to its existing copper infrastructure G.fast.
This comes alongside efforts to improve its customer service, BT said, as the company revealed new initiatives to reduce the standard time taken to fix service faults in its BT Consumer segment, as well as a commitment to handle 90% of its customers calls in the UK by March 2017. This follows a similar pledge from EE to handle 100% of customer calls in the UK by the end of the year.
"This has been a landmark year for BT. We've completed our acquisition of EE, the UK's best 4G mobile network provider, we've passed more than 25 million premises with fibre, and we've also delivered a strong financial performance. We've met our outlook with our main revenue measure up 2.0%, the best performance for more than seven years. Our profit before tax was up a healthy 9%," said Chief Executive Gavin Patterson in a statement.
"Our strong overall performance for the year is reflected in our full-year dividend, which is up 13%. Our results and the investments we're making position us well to continue to grow in the coming years. In light of our confidence we are setting out financial and dividend guidance for the next two years," Patterson added.
Telecommunications and television rival Sky PLC hit back at BT's investment plans, renewing its call for BT's infrastructure division Openreach to be split-off from BT.
"Today's statement shows that BT continues to see copper as the basis of its network for 21st century Britain. Despite BT's claims, it is clearer than ever that their plans for fibre to the premise broadband will bypass almost every existing UK home," said Group Chief Operating Officer and Chief Financial Officer of Sky Andrew Griffith in a statement.
"This limited ambition has been dragged out of BT by the threat of regulatory action, demonstrating once again why an independent Openreach, free to raise its own long-term capital, is the best way for the UK to get the fibre network it needs," Griffith added.
Shares in BT were up 3.3% at 454.00 pence Thursday morning, the biggest gainer in the FTSE 100.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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