498,000 Openreach GEA fibre connections added in last quarter
The third quarter results from the BT Group are now available and detail the groups performance up to 31st December 2016.
The quarter saw an extra 498,000 connections on the GEA platform, i.e. FTTC, FTTP or G.fast trial and providers outside the BT Group accounted for 48% of those additions. This means that 7.2 million premises are now taking a service which represents take-up of 27% of those passed.
"The good progress we’re making across most of the business has unfortunately been overshadowed by the results of our investigation into our Italian operations and our outlook. We’ve undertaken extensive investigations into our Italian business, including an independent review by KPMG, and I am deeply disappointed with the unacceptable practices by some that we’ve found. This has no place at BT, and it undermines the good work we’re doing elsewhere in the Group. We are committed to ensuring the highest standards across the whole of BT.
We face a more challenging outlook in the UK public sector and international corporate markets but we’ve seen record growth at EE, strong momentum in Consumer, and our highest ever fibre net connections in Openreach. Customer experience remains a top priority. EE is now answering 100 per cent of its customers’ calls in the UK and Ireland. In Openreach, missed appointments have halved year on year. We’ll continue to invest to ensure our service levels improve and that our customers see the benefit.
We are pushing ahead with reforms at Openreach, particularly on governance and customer service and continue to believe an agreement can be reached with Ofcom on its Digital Communications Review. We think these changes address Ofcom’s concerns and can form the basis for a fair, proportionate and sustainable settlement.Gavin Patterson, Chief Executive
The roll-outs in the last quarter from Openreach have largely been BDUK or privately gap-funded based, but there is some commercial roll-out in the 250,000 premises passed in the quarter, this additional coverage takes the raw volume to over 26 million premises by the GEA products. We should highlight that being passed by an Openreach VDSL2 service does not guarantee superfast speeds, hence all the time invested in our tracking of the roll-outs.
The increasing take-up is important for Openreach, as while revenue was down 1%, there was actually an impact of some £60m due to the impact of regulation with the growth in revenue from fibre based connections almost negating that. This growth does come at a cost, with capital expenditure running at £409m in the quarter (up £88m from same quarter last year), the level of gross grant funding was £45m (£35m lower than same quarter in 2015) and offset by deferral of £32m of the total grant funding.
With respect to the plans Ofcom has for Openreach, there is the new Openreach Board Chairman in the form of Mike McTighe, and Openreach is reporting that missed appointments have halved year on year and on the sixty metrics Ofcom sets they are exceeding these copper based minimum service targets. Ethernet orders are still not perfect in times of delivery timeframe but this is apparently improving with the backlog being cleared slowly.
Looking at the consumer side, which for the majority of the public is still seen as the face of BT Group. The Consumer section of the report does seem to conflate the meanings of fibre based and superfast fibre several times, so when they report 'Superfast fibre broadband growth continued with 260,000 retail net additions, taking our customer base to 4.7m' we take this to mean that they added 260,000 customers on a BT Infinity service, which while the advertised speeds are up to 52 Mbps and up to 76 Mbps the service is sold to people who will be getting non-superfast speeds (i.e. sub 24 Mbps) and for those with sub 15 Mbps estimates they are sometimes not allowed to order Infinity but a product that will perform the same but not be counted as Infinity in advertising, thus not affecting the average speed or 10% advertised speed. Either way with 51% of customers on the fibre products this is impressive and at 4.7 million customers means they are rapidly catching Virgin Media and if the growth continues may pass them in 2017 to have the largest fibre based customer base. With some 9.2 million retail broadband customers BT Consumer is the largest retail provider by a large margin, and the question is how to encourage more of the 4.5 million ADSL/ADSL2+ customers to upgrade.