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28th July 2005:
British Telecom
BT
First quarter results show 5.6 Million broadband end users
Ben
Verwaayen, Chief Executive, commenting on the first quarter results,
said:
“This has been a great first quarter and builds on the
momentum we have seen gathering for more than a year.
“Revenue
grew by 5 per cent in the quarter and earnings per share grew by 251 per cent.
We have achieved real international success. We won global networked IT
services orders of £2.4 billion in the quarter which takes orders for the
last twelve months to a record level of more than £8 billion – a
terrific achievement. In the UK, in a highly competitive market, we have
launched a number of innovative services such as BT Fusion, a world first that
delivers all the benefits of a fixed line from a mobile phone.
“The
transformation of the business is delivering real value to our customers and
shareholders.”
BT have today published First quarter results to
June 30, reporting a profit before taxation of £511 million (up 20%) and
a doubling of wholsesale broadband connections (over the previous 12 months) to
5.6 million. Broadband revenue was reported to have grown by 55 per cent to
£161 million and the growth of broadband continues with 1,940,000 BT
Retail connections at June 30, 2005, an increase of 11 per cent in the quarter.
BT's programme to upgrade customers to high speed broadband services
continues with a further 355,000 BT Business and consumer customers upgraded to
speeds up to 2Mbit/s in the quarter.
Also of interest has been BT
Retail's recent announcment regarding the initention to employ Microsoft TV,
IPTV Edition software platform to deliver TV over Broadband in the UK. Trials
of TV over broadband begin in early 2006 with plans to deliver a commercial
service later in the same year.
Group Results - Broadband related
extracts as follows
The strong growth in new wave revenue continued
and at £1,385 million was 48 per cent higher than last year. New wave
revenue accounted for 29 per cent of the group’s revenue compared to 20
per cent in the first quarter of last year. Excluding Albacom and Infonet, the
organic growth in new wave revenue was 31 per cent. New wave revenue is mainly
generated from networked IT services, broadband and mobility. Networked IT
services revenue grew by 43 per cent to £904 million, broadband revenue
increased by 69 per cent to £314 million and mobility revenue at
£61 million achieved growth of 42 per cent.
Networked IT services
contract wins were £2.4 billion in the first quarter, including a
contract with the Ministry of Defence expected to be worth up to £1.5
billion over seven years. Total orders achieved over the last twelve months
were a record £8.2 billion. BT had 5.6 million wholesale broadband
connections at June 30, 2005, more than doubling in the year. BT Mobile had
370,000 contract mobile connections at June 30, 2005, an increase of 72 per
cent in the customer base from last year.
Revenue from the group’s
traditional businesses declined by 6 per cent (4 per cent excluding the impact
of reductions to mobile termination rates and Albacom). This was a reduction in
the rate of decline compared to last year but continues to reflect regulatory
intervention, competition, price reductions and also technological changes that
we are using to drive customers from traditional services to new wave services,
such as broadband and Internet Protocol Virtual Private Networks (IPVPN).
Consumer revenue in the first quarter was 6 per cent lower (5 per cent
lower excluding the impact of reductions to mobile termination rates). New wave
consumer revenue increased by 67 per cent, driven by the continuing growth of
broadband and mobility.
Traditional consumer revenue declined by 11 per
cent year on year (9 per cent lower excluding the impact of reductions to
mobile termination rates) reflecting the continued impact of Carrier
Pre-Selection (CPS), wholesale line rental (WLR) and broadband substitution.
The underlying 12 month rolling average revenue per consumer household (net of
mobile termination charges) of £254 declined by £2 compared to last
quarter, with increased broadband volumes more than offset by lower call
revenues. Contracted revenues increased by 2 percentage points to 65 per cent
compared to last quarter, 6 percentage points higher than last year.
Revenue from smaller and medium sized (SME) UK businesses declined by 5
per cent (3 per cent excluding the impact of reductions to mobile termination
rates). New wave revenue grew by 26 per cent driven by continued growth in
broadband and networked IT services. The number of BT Business Plan locations
increased by 66 per cent against last year to 489,000 by June 30, 2005, an
increase of 10 per cent in the quarter. BT Business Plan continues to grow
successfully covering over 50 per cent of BT’s SME call revenue.
Major corporate (UK and international) revenue showed strong growth of
14 per cent compared to the first quarter of last year, with strong growth in
new wave revenue (43 per cent) more than offsetting the decline in traditional
services. Excluding the impact of Albacom and Infonet, new wave revenue grew by
18 per cent. There is a continued migration from traditional voice only
services to networked IT services and an increase in mobility and broadband
revenue. New wave revenue now represents 55 per cent of all major corporate
revenue.
Wholesale (UK and Global Carrier) revenue increased by 12 per
cent (17 per cent excluding the impact of reductions to mobile termination
rates and Albacom). UK Wholesale new wave revenue increased by 77 per cent to
£230 million, mainly driven by broadband and managed
services.
And....
Revenue from traditional services was 9 per
cent lower than last year (7 per cent excluding the impact of reductions to
mobile termination rates). The reduction includes the effects of continued high
levels of migration to new wave services such as broadband and IPVPN, which is
reflected in a fall of over 35 per cent in dial up internet minutes and a
reduction in ISDN lines. In addition, there has been a 2 per cent decline in
the overall fixed to fixed calls market and a reduction in market share from
competitive pressure.
BT Retail’s new wave revenue increased by 52
per cent compared to last year and accounted for 14 per cent of BT
Retail’s total revenue in the quarter, up from 9 per cent last
year.
Broadband revenue grew by 55 per cent to £161 million. The
growth of broadband continues with 1,940,000 BT Retail connections at June 30,
2005, an increase of 11 per cent in the quarter. Net additions of 188,000
resulted in a 28 per cent share of the broadband DSL additions in the quarter.
Our programme to upgrade customers to high speed services at no extra cost
continues with a further 355,000 BT Business and consumer customers upgraded to
speeds up to 2Mbit/s in the quarter.
BT Retail has recently announced
its intention to use the Microsoft TV, IPTV Edition software platform to
deliver TV over Broadband in the UK. Trials of TV over broadband begin in early
2006 with plans to deliver a commercial service later in the same year. The
combination of BT’s 21st Century Network with Microsoft’s
best-in-class technology will result in an exciting set of next generation
entertainment and communication services available to consumers across the
UK.
And...
BT Wholesale revenue of £2,304 million increased
by 1 per cent driven by external revenue growth of 9 per cent (underlying
growth is 18 per cent excluding the impact of regulatory reductions to mobile
termination rates). The growth continues to be driven by new wave services,
mainly broadband and managed services, increasing by 77 per cent to £230
million. Revenue from new wave services now accounts for 23 per cent of
external revenue compared to 14 per cent in the first quarter of last year.
Internal revenue has declined by 4 per cent to £1,283 million due
to the impact of lower volumes of calls and lines and lower regulatory prices
being reflected in internal charges, which is partially offset by strong growth
from internal broadband revenue.
Gross variable profit of £1,748
million is 2 per cent higher than the first quarter last year reflecting volume
increases and a favourable change in sales mix with broadband growth more than
offsetting the decline in traditional products.
A combination of cost
reductions, lower leaver costs and higher revenue in the quarter has resulted
in the EBITDA increase of 7 per cent and operating profit increase of 19 per
cent. Cost savings for the quarter have been partly offset by increased levels
of activity in the network mainly due to growth in broadband and local loop
unbundling.
Capital expenditure in the quarter is 2 per cent higher than
last year as a result of expenditure to support the continuing growth in
broadband and the transformation of the group’s network that has more than
offset a reduction in investment in legacy network technologies.
Full
Report:
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BT Broadband
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