BT profits fall, confirms 2021/22 outlook as it accelerates savings target

BT Group on Thursday reported a fall in interim profits due to higher finance costs as it reaffirmed its outlook for this year and next while also bringing forward its cost-savings target.

The company said pre-tax profit fell 5% to £1bn from £1.06bn a year ago. Revenue was 3% lower at £10.3bn driven by a decline at its Enterprise and Global unit and flat Consumer division sales.

Adjusted core earnings rose 1% to £3.74bn, with revenue decline offset by tight cost management, and lower indirect commissions. An interim dividend of 2.31p per share was declared.

Peak capital expenditure from fiscal 2023 is expected at £4.8bn from £5bn. Looking past the peak of its fiber build and its move towards an all-fiber, all-IP network, BT said it expected a capital expenditure reduction of at least £1bn and lower operating costs of £500m.

The company brought forward its fiscal 2025 target of £2bn in gross annualised savings to fiscal 2024, with further savings planned in fiscal 2025, within the expected cost of £1.3bn.

BT said it expected at least £1.5bn expansion in normalised free cash flow compared to 2022 by the end of the decade, solely from lower capital expenditure and operating costs as it rolled out all-fibre internet network, before any benefits of increased revenue and further transformation efficiencies, net of tax.

It also expects around £5bn of carried forward tax losses from full-year 2023 as a greater proportion of capex to qualify for the government's cash tax super-deduction.

BT is eyeing its largest shareholder, the billionaire Patrick Drahi who now sits on the share register with a 12% stake. He also owns telecoms firms in France, Portugal and Israel, with a reputation as an aggressive cost-cutter.

He said he did not intend to make a takeover offer, which ruled him out of such a move for six months under UK rules. That pledge expires next month.