BT Group financial results for third quarter of 2017
The latest financial results from the BT Group are in and the publication of changes in the level of roll-out of full fibre (FTTP) on 1st February means we can concentrate today on the more usual cold figures from the results that cover the three months to the end of 31st December 2017.
The Openreach full fibre expansion with the aim of reaching three million premises by 2020, is of course covered in the results and the fact that some of these will be rural based in partnership with Government projects reflects that the 40 towns and cities are only just a first phase and the reality on the ground is that full fibre is popping up all the time all across the UK. The results also repeat the line that continued investment is reliant on the right environment and that utimately if people fail to buy better broadband services roll-out may be reviewed.
The superfast fibre footprint figures have had a tweak and that is these results and future results will report only those premises that Openreach believes can order a faster than 24 Mbps figure in its overall passed figure and this is reported as 27.4 million premises. Of course no use building it if no-one is buying services and the good news is that an extra 600,000 connections over the fibre network were ordered and connected taking the active footprint to 9.2 million premises. While many have predicted the demise of the phone line, while this may be true for telephone calls the Openreach physical line network grew by around 42,000 - though there is a question here of whether fibre only new build premises appear in this figure as this may explain the majority of that figure.
Capital expenditure was £477m, up £68m or 17%, reflecting our ongoing investment in fibre broadband speed and coverage which contributed to the Government’s achievement to provide superfast broadband coverage to 95% of the UK by December 2017. Capital expenditure was after gross grant funding of £55m (Q3 2016/17: £45m) directly related to our activity on the BDUK programme build which was offset by an increase in our grant funding deferral of £50m (Q3 2016/17: £32m).Openreach on Capital Expenditure
The ultrafast footprint which is only reported as a combined FTTP and G.fast figure is 886,000 premises and we believe G.fast is a rapidly increasing part of this and is going to out strip the FTTP component very quickly, in the rush to celebrate the 3 million FTTP expansion many skipped the reality that the G.fast roll-out is not being scaled back and if you do get G.fast you won't be getting FTTP, though it has not been ruled out that if you are too far from the cabinet based pod that FTTP infill might not be used (NOTE: In the largely urban domain of G.fast to date, Mildenhall is an example of one of the less urban deployments, the majority of premises are within reach and some dense urban areas will see all premises on a cabinet able to order G.fast). In our efforts to continue with verification of provider figures now that the focus is shifting away from solely superfast more time and effort will go into the G.fast tracking and take-up and thus speed test results will be a key assistant in that task.
BT Consumer as the largest UK retail ISP continues to grow adding 35,000 broadband customers in the last quarter, and added 208,000 VDSL2/FTTP/G.fast connections in the quarter to give a fibre base of 5.5 million, which makes them the second largest UK broadband provider even if you ignore the ADSL/ADSL2+ customer base. The overall (all consumer fixed line broadband connections) figure of 9.3 million connection figure means the positionas the largest retailer looks set to remain so for many years. What may surprise some customers and observers was that revenue was flat year on year, impacted by things like decreasing call volume which may go some way to explaining the core product price rises on broadband.