BT Group publishes Q1/2017 financial results
The quarters results for April/May/June 2017 for BT are now available and Fibre to the Premises features of course, as the consultation on whether to do more FTTP is underway, underpinning the shift in focus from Openreach just doing what BT Consumer wants (which is what the general belief of the past has been) towards ensuring consultation with the wider industry is much more open and if you want to be a bit cyncical you could say its a chance for those firms shouting for much more FTTP from Openreach in the last two years to step up and commit themselves to using a product and promoting it.
Looking at the usual figures in the quarter Openreach added 437,000 new connections across its fibre portfolio which comprises VDSL2, G.fast and FTTP to take the number of customers to 8.1m or ~30% of those passed.
Our base-case assumption for take-up in BDUK areas remains at 39% of total homes passed. Under the terms of the BDUK programme, we have a potential obligation to either re-invest or repay grant funding depending on factors including the level of customer take-up achieved. While we have recognised gross grant funding of £26m (Q1 2016/17: £39m) in line with network build in the quarter, we have also deferred £19m (Q1 2016/17: £12m) of the total grant funding to reflect higher take-up levels on a number of contracts. To date we have deferred £465m (Q1 2016/17: £270m).Take-up for BDUK areas
The take-up of FTTP and G.fast means that apparently they have some 100,000 active customers out of a footprint of 550,000 for G.fast and FTTP, though from previous comparisons to what has been reported to Ofcom over a couple of years for the FTTP footprint we can often find premises included which are not able to order service and our tracking is a lower figure of 377,000 premises passed by those two technologies - though as we have not spent a lot of time on chasing down the G.fast product yet as no provider is openly advertising it our figure of 38,738 premises passed by G.fast is expected to be a lot lower than expected, perhaps half the actual volume.
Interestingly the UK broadband market as served by Openreach only grew by 36,000 connections, so the years of massive rises in demand for broadband are levelling off, and for those that don't use broadband much the improving speeds, coverage and capabilities from mobile devices and broadband may meet their needs better than fixed line services.
Regulation is having an impact on revenues on Openreach, since while the increased take-up of the GEA services meant that revenue in Openreach was up 3% once the impact of regulation this increase was just 1% i.e. an impact of £20m. Hence the FTTP consultation is as much about getting retailers on board as it is getting some regulatory certainty from Ofcom and the Government.
BT Consumer is still the face of BT to many millions after decades of competition and compared to Openreach. Call centre moves back to the UK continues with 86% of calls now answered in the UK and a call wait time on average of 71 seconds (two minutes faster than last year). The annual complaint is about price rises and this year saw broadband and line rental price rises and changes in who gets BT Sport for free, this has led to a 7% increase in revenue at BT Consumer but with a 9% increase in operating costs one can get a bit of an idea for why prices are going up - factors such as UK customer service role costs, Premier League rights and costs from closing the legacy Vision TV platform.