BT revenue growth improves but EBITDA weighed by sport investment

BT will pay a half-year dividend of 4.4p, a 13% increase on the same period last year but largely expected, after underlying revenue excluding transit rose 1% in the half-year to 30 September, helped by a 2% increase in the second quarter.

However, earnings before interest, tax, depreciation and amortisation (EBITDA) fell 1% in the second quarter, reflecting the investment in BT Sport, but this was also expected.

Earnings per share, at 6.9p, represented 0.2% growth and was ahead of consensus at 6.5p.

In aggregate, results were slightly ahead of company-compiled consensus forecasts, with revenues and EBITDA both beating expected numbers by 1.1% as every division came in slightly ahead of consensus estimates, with consumer and wholesale both particularly strong.

As well as highlighting efforts to improve customer focus, take fibre broadband to a wider number of customers and Wednesday's clearance from the Competition and Markets Authority for its acquisition of the EE mobile network, chief executive Gavin Patterson said demand for BT Sport Europe, the new UEFA Champions League-focused channel, had been "good", which helped attract a record number of TV customers in the quarter.

"Its contribution has been better than we expected, helping drive a 7% increase in BT consumer revenue. Mobile is another growth area and I am pleased our consumer customer base now stands at more than 200,000."

Broadband additions reached 82,000, or 51% of the DSL share, but were slightly down from Q1 and the second quarter last year, with total consumer line losses falling 52,000, but an improvement on falls in the previous quarters as a result of BT’s Champion’s league offer.

There was an acceleration of fibre demand to 212,000 and net TV adds of 106,000 was the best ever quarter for TV, well ahead of 60k in the first quarter and 38k in the second quarter last year.

Analysts at Goldman Sachs highlighted the strong KPIs and said it did not expect change to the status quo of UK telecoms to come from regulatory review of the sector from Ofcom, apart from improved service requirements for BT's Openreach infrastructure arm.

Credit Suisse agreed: "Yesterday’s BT-EE merger approval by the CMA remains a key positive, and we think that the CMA’s comments bode well for the Ofcom review as they suggest that backhaul regulation and VULA may be sufficient to regulate post-BT-EE too".