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415,000 new fibre based broadband connections from Openreach in last quarter
Thursday 29 October 2015 09:22:49 by Andrew Ferguson

The performance of the BT Group and how the various divisions stack up is under close scrutiny with those seeking to hive off the Openreach sector into its own FTSE 100 company keen to find further information to support their case, thus we have the latest set of financials for the BT Group - the second quarter up to the end of September 2015.

Openreach had a good quarter with operating profit up £26 million compared to the same quarter last year and the contribution of the GEA-FTTC/FTTP services to the revenue pot increases, fibre revenue was up 38% and lead to an overall growth in revenue of 2% in Openreach. As usual regulation had an impact, this quarter of around £30 million.

Openreach added some 415,000 net fibre based connections a significant improvement on the last quarter and this takes the number of fibre based customers to 5 million (21% of premises passed). Importantly with regards to competition the split between BT Retail and other providers has improved such that 49% of the new connections where from external providers e.g. Sky, TalkTalk, Vodafone. While many of the new fibre connections will have been existing ADSL/ADSL2+ customers upgrading some 160,000 new broadband connections took place in the last quarter.

"Operating costs were flat year on year with our cost transformation activities offset by the additional costs to deliver revenue growth and by the investments we are making to improve customer service. There was no benefit this quarter from the sale of redundant copper (Q2 2014/15: £6m). EBITDA grew 3% and depreciation and amortisation was 1% lower with operating profit up 9%.

Capital expenditure of £348m, which is after net grant funding of £61m (Q2 2014/15: £94m), was up 41%. This was mainly due to our fibre broadband rollout, connecting new homes, and higher volumes of Ethernet provision. For the year as a whole, we expect capital expenditure in Openreach to be above 2014/15 as we continue to invest in these areas."

Openreach on costs and cap-ex

Looking at BT Consumer who run the retail operations, revenue was up but operating costs increased so while still presenting an operating profit it was 16% down on the same quarter last year. The 7% revenue increased was helped substantially by a 17% increase in revenue of TV and broadband and a 1% increase in revenue from calls and line rental. BT Consumer has some 7.9 million broadband customers now, adding 82,000 customers in the quarter and BT Mobile which launched in March 2015 now has some 200,000 customers. The TV bundles are providing popular with 106,000 BT TV customers added in the quarter to take the total to 1.3 million.

For those wanting to try and delve into the figures themselves the results are available for download from the BT website.


Posted by WWWombat 12 months ago
Passing 700,000 properties is a drop from the regular commercial total of about 1million per quarter, but to be expected as things move to less dense areas.

The grant deferred total has gone from £100m to £156m, with "most to be reinvested". It isn't clear if this means the previous figure of £129m will increase.
Posted by WWWombat 12 months ago
And we see the /real/ impact of all that money spent on TV rights: ARPU increases by 6%.

It seems that, rather than stealing money from the network, Sports seems to be helping to bring money in, and make it stick.
Posted by themanstan 12 months ago
Pension deficit payment just shy 900M GBP last year and 625M this year in Q1...
Posted by fastman 12 months ago
www more reason to buy a FTTC service than stay on copper -- sport and increasing bandwidth requirements will help drive fibre take up

Posted by TheEulerID 12 months ago
It would be interesting to know how much of that pension deficit would be allocated to OR in the event of a a complete separation. By turnover, OR is only 29% of the business but the great majority of former employees were surely employed on what would have been OR roles in the past.
OR is a £5bn a year business. In any event, I expect the pension deficit to be a drain on cash for many years to come.

Posted by chilting 12 months ago
It seems to me that Openreach is far more likely to invest in improving its network as part of BT than as a separate PLC. The net benefits of improving broadband speeds are far more important to the retail, wholesale and TV divisions than they are to Openreach. Therefore, it would be rather stupid to split the company.
Posted by Blackmamba 12 months ago
Hi Chi.
The 100k customers that are being changed over per month by ISP,s it proves that Openreach is providing the fibre ports and the contractors are changing over in the two week window. Eg Plaistow. WS. Speeds showing on Thinkbroadband maps just a small delay. Openreach is on a roll and they are spending wisely.
Posted by DrMikeHuntHurtz 12 months ago

Exactly, if OR ever becomes independent it'll end up like NetworkRail.
Posted by WWWombat 12 months ago
Isn't that 100k per week?
Posted by JNeuhoff 12 months ago
@chilting: BT, in its current form, is already worse than NetworkRail. You can only gain when Openreach is split of BT, a win-win situation for both Openreach and the customer.
Posted by TheEulerID 12 months ago

So you mean that BT has debts of £38bn (and rising) which the government are responsible for? Or do you mean it's 2 years late on electrifying the GWR line? Or do you mean it's had to delay to some indeterminate time the electrification of the Manchester-Leeds route? Or that virtually every major NR project is over budget?
Posted by TheEulerID 12 months ago

Just to provide a bit of evidence, here's just one of (many) reports on the electrification of the GWR line.

Posted by chilting 12 months ago
The onus is on you to provide evidence to support that statement.
Most of the momentum for such as split is coming from A, BT's competitors, especially Sky and B, the politicians who are trying to shift blame to BT for not dealing with the final 5%.
Posted by mklinger 12 months ago
I would like to know how many premises still can't get superfast broadband and where. How many exchange lines still can't get it.
Posted by andrew (Favicon staff member) 12 months ago

UK wide and local stats with the UK split into 650 smaller areas. 87.6% of the UK can get a 24 Mbps and faster connection.

EO wise its around 500,000 (1.6%) and number that is decreasing.
Posted by WWWombat 12 months ago
I'm surprised the EO count is that low. Any idea what the figure started out as?
Posted by Blackmamba 12 months ago
Hi WWwombat.
Please remember the EO customers would only be able to get speed from 2---20 meg down Adsl.- adsl+2 plus there are many customers that are happy with the service they are getting in this band. There are many customers that can get over 15 meg on EO lines.
Posted by Dixinormous 12 months ago
Unsure what you're talking about there, black appendage, he stated surprise that so few lines out of the national total are EO. The speeds they get and how happy they are with their services I doubt come into his surprise at how few lines there are with that status.
Posted by WWWombat 12 months ago
Exactly @dix.
Back before BT started to include EO lines, and had barely started on the BDUK projects, I reckoned there were 3 main problem areas.

I reckoned 5% needed deeper fibre than FTTC (such as FTTRN) to reach the superfast threshold, more than 5% to be on EO lines needing a PCP upgrade, and 5% to be even more intrinsically unreachable.

Reaching 90% would need at least one area solving.

To get down to 1.6% suggests they started with less than I thought, or have made real inroads in upgrading them.
Posted by andrew (Favicon staff member) 12 months ago
A lot of EO work has gone on, and not all of it is live with FTTC yet, Scotland particularly in the last quarter has seen total EO exchanges gain cab(s) to serve premises.

Have not run the scenario where every cab gets enabled, but beyond 90% superfast looks achievable even without extra FTTrN or more P.

Northern Ireland is seeing the fibre to superfast gap closing slowly as more cabs are used for long lines and some FTTP too.

Wales has around 80,000 FTTP on the way if plans pan out too.

Of course being positive is a highly unpopular line to take on BDUK roll-out
Posted by JNeuhoff 12 months ago
@TheEulerID: It's hard to compare 2 different things here (NetworkRail and internet/telecom). But if you take the state of fibre in this country, you can easily see that FTTP is virtually unavailable for most of this country, whereas, at least in East Anglia, the railway service is pretty good. Not even Fibre-on-Demand can be ordered any more, but I can buy a first-class railway ticket to London.
Posted by chilting 12 months ago
It is very difficult to be positive when you are in the position of having the worst service before the BDUK project started and are still in that position as it draws to a close.
But, you are right the results are impressive.
Posted by Blackmamba 12 months ago
Hi Chi.
When the BDUK (Surrey) contract was signed the EO customers were covered at various Exchanges. There was a group working party Openreach that was used to provide the new FTTC plus an extra Cab outside of the Exchange ground. The base work was done by contractors and Openreach diverted the EO lines to the new Cab. The delay on bringing the FTTC/P in service was waiting for the fibre spine to arrive some over 10 miles. EgRunfold to Haslemere.
Posted by chilting 12 months ago
BDUK have done a very good job upgrading the EO lines in West Sussex - from my observations very nearly 100% are done or are in the process of being upgraded.
Posted by Blackmamba 12 months ago
Hi Chi.
Thanks for your reply you will have to wait for your Cab to show Fibre on Demand or FTTC/P this could suggest that the fibre spine is in place you can find this on Openreach Where and when ( update Weekley or as required) please note that the fibre link for Northchapel (WS) is being worked on plus the route to telegraph Hill Fernhurst WS old Plant Protection Site.
Posted by chilting 12 months ago
Unfortunately the cost of getting fibre 2.5km from the node would be well beyond my budget. Fixed Wireless is a far better option.
Posted by WWWombat 12 months ago
A first class ticket doesn't get you a faster journey; you need to invest in HS2 for that.

Yet you argue against *that* investment, a wholesale bypass of "old technology", when it is the most direct equivalent to FTTP.

The breadth-first, stepwise deployment of FTTC, with FTTRN (or NI's all-in-one cabs) then FTTdp later, is the telecom equivalent of an inline upgrade of the west coast mainline.

A first class ticket, more comfort, is simply equivalent to a lower contention on existing infrastructure.
Posted by JNeuhoff 12 months ago
@WWWombat1: OK, since you like the comparison of apples and oranges: The huge investment needed for the HS2 to gain a minor increase in speed for just a few isn't justified, whereas there is a much bigger gain with a country-wide fibre broadband for all, with speeds 5 to 10 times faster than old copper.
Posted by ValueforMoney 12 months ago
@WWWombat that £157m capital accual for BDUK. If the first £129m was for clawback on take-up, this £27m may well be the beginings of the capital which needs to be contributed. I sent Andrew a 25 pager for review on this matter. Your comments welcome.
The q2 release is now saying this could be repaid. I hope there is plan not just for this £157m but the underspend from phase 1 which is vast.
Posted by RAConnell 12 months ago
Well I'm in Guildford and still without FTTC faster BB. BT still cannot provide a date for FTTC more than 2 years after first indicating its availability. BT Openreach and Patterson are incompetents.
Posted by Blackmamba 12 months ago
Hi Raconnell.
Contact your MP for your area he should be able to get the reasons for this situation you may be getting it after the next phase under the OMR which may be released in the new year. I have been told it has been passed by the EU and Katie is working on it . Contact her on Surrey Super Fast and she will help you.
Posted by andrew (Favicon staff member) 12 months ago
@blackmamba and if the cabinet is part of the commercial roll-out i.e. may be in that plan but delayed as priority is going to Surrey project cabinets then people on the project will be able to do nothing.

Given the level of Virgin Media coverage in Guildford it is entirely likely that the cab area would not qualify as may be served by ultrafast cable.
Posted by Blackmamba 12 months ago
Hi Andrews Staff.
As we do not know the location of this customer he could be refering to the Guildford code area also his number may have been barred for some reason .
There is a Cab in Haslemere that has been standing for aprox 2 years date for avalibility 2016 March it is in the commercial section reason ?
Posted by cooperfarncombe 12 months ago
@Raconnell - do you know if you can access Virgin Media broadband?
Posted by Blackmamba 12 months ago
Hi Andrews Staff and David.
I would have thought that Guildford Exchange area would have been covered by fibre access from yesterday's results 98.4 % over Surrey these leaves aprox 7k customers with out access. (500kX1.4=7000). It could be that this customer is close to the exchange on a Cab that has only access to ADSL+2 thus giving 15 meg possibility (Surrey,s Target). This problem is Exesting in the Haslemere area code 01428.
Posted by andrew (Favicon staff member) 12 months ago
Without knowing the users situation with regards to cable availability impossible to answer.

19 cabinets on Guildford exchange without FTTC at this time, most likely covered by cable but cable does not align to Openreach cabinet coverage neatly.
Posted by Blackmamba 12 months ago
Hi Andrews staff.
Thanks for reply over the 19 Cabs in my thinking the ones which are not covered by Virgin Media I would think Katie would be after covering these in her (SCC) procurement (OMR ) unless another ISP has indicated an interest. It could be Openreach is hold back because they may be by passing the cab with fibre at a later date as they have done at other locations eg Wormley, Elstead, Godalming.
Posted by cooperfarncombe 12 months ago
@Blackmamba I think the related area is Onslow Village, a high density population area near the town centre of Guildford. Probably in the commercial deployment. In this area cabinet 128 is not FTTC enabled with Openreach W & W saying UR (Under Review) and cabinet 95 appears to be waiting for something with an availability date of 31st March 2016 and Openreach W & W saying EA (Enabled Area, but cabinet not ready). SuperfastSurrey have covered whole cabinets left out of the commercial deployment, but not if VM are present as in Onslow village. Hence the lack of BT action.
Posted by Blackmamba 12 months ago
Hi Farncombe.
Thanks for your reply, I would have thought that BT ISP would have paid for these Cabs if they were going to get a hight take up rate for their own customers.
The date of 31st March could be the date to get these Cabs in on the OMR thus a small % payment from SCC clawback money please remember this is my view. I am sure Openreach will provide fibre access to these locations ASAP filling in the 98.6%----100% infil
Posted by cooperfarncombe 12 months ago
Openreach may or may not get around to these cabinets. SCC should have nothing to do with them if the area is covered by VM, which I believe it is.
Posted by Blackmamba 12 months ago
Hi Farncombe
This is where the target of 99.7% at 15 meg starts to kick in against BT results over 500 k customers in Surrey I am sure Katie's legal dept has seen this option.
I have found Cab 26 WS Ferhurst Haslemere 01428 with customers at 7000 Mtres is open for service (fibre access) news comming in on the last 5% options.
Posted by Somerset 12 months ago
@BM - where has an ISP paid for FTTC cabs?
Posted by Blackmamba 12 months ago
Hi Somerset.
In my thinking all ISP,s that terminate on a port FTTC are paying their part for the facilities so it is a group responicibity. That is why I try and get customers to get connect ASAP on the 100 pair tie thus transfer the investment on Openreach budget plus putting pressure on the new 10 meg window also getting other customer hitting the 30 meg EU target who wish to be involved.
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