BT Group results for year ending 31st March 2019
The full latest quarters results that cover the period up to the end of 31st March 2019 are now available and we covered the Openreach news in its own news item, so time to take a look at what is happening at other areas such as the consumer and wholesale divisons.
Since joining the company three months ago, it has become clear to me just how fundamental BT’s role is in connecting our society. While we are really well positioned in a very challenging and competitive UK market, we have a lot of work to do to ensure we remain successful and deliver long term sustainable value to our shareholders. We need to invest to improve our customer propositions and competitiveness. We need to invest to stay ahead in our fixed, mobile and core networks, and we need to invest to overhaul our business to ensure that we are using the latest systems and technology to improve our efficiency and become more agile.Philip Jansen, Chief Executive
The consumer division is showing that the share of the broadband base on a superfast service has increased from 64% in Q4 2017/2018 to 72.9% in the last quarter but the average revenue per customer has reduced from £38.90 to £38.80 and is down from the peak of £39.60 in Q3 2018/2019. With BT Consumer customers now eligible for automatic compensation on faults and delayed installs we may see this drop further in the next year, and possibly further once EE and Plusnet start doing automatic compensation too. The speed guarantee may also have an impact if lots of people start to successfully claim the £20 vouchers (maximum of £80 in a year).
The picture in the wholesale division now called Enterprise is that they service some 7.62 million lines for BT Consumer and there are a further 7.48 million lines sold via wholesale and the share of the base on a superfast fibre service is running at 45.9% up from 39.5% from a year ago. The cost pressures of various changes mean that while there is a continued shift from ADSL/ADSL2+ to the VDSL2 or better products revenue is decreasing with fixed line voice revenue down 12.1% compared to a year ago at £1,259 billion, broadband revenue down 4.2% and now at £478 million for the year, but WAN and Ethernet connectivity is up by 4.3% at £466 million.
The key to an ongoing healthy future for BT Group seems to be getting its FTTP network rolled out fast enough that efficiencies can be achieved that will offset the declining revenues from voice services and survive the increasing competition from the new full fibre operators, the competition from Virgin Media is well understood but with new market entrants keen to exploit the gaps BT Group may well find in some parts of the UK it is no longer the dominate force it is today. Also with the low pricing from new entrants there is going to be little appetite for premium priced ultrafast services, so we expect revenue from FTTC services to decrease such that ultrafast connections will sit at the price point that FTTC was at a couple of years ago, and lest we forget when ADSL was the best you could get the same pricing of £40 to £50 per month was the norm, so not much has changed other than the need to order the upgrades and with the shift to FTTP actually get the fibre drawn into the property.
The Broadband Universal Service Obligation does get a mention and as BT Group and KCOM are the two designated USO providers that with just a few months now until people can start requesting a USO intervention it is worrying that BT Group is asking Ofcom for greater clarity on how and when recovery of costs will take place. With the USO announcement expected this summer one would hope everything was defined and operators would be scaling up internal systems and processes and training staff what to do ahead of the first requests in 2020. We would like clarity on Ofcom is going to determine who does and does not get to use the USO, looking at sync speed alone is a dangerous game since for some it may be above the USO threshold for part of the year and below it for the rest.