BT Group financial results for Q1 2019/2020 published
While the BT Consumer figures in the latest BT Group results covering April, May and June of 2019 (i.e. Q1 2019/2020) are missing key elements we do have the key ones for Openreach.
While no figures of the number of customers are shown there has been a 3% decline in revenue compared to a year ago (now £1.115 million) with with the average revenue per customer remaining static at £37.90 per month this suggests a decline in the number of customers. Given the pricing wars that continue in the consumer arena this is probably no surprise, the last few months have seen BT Consumer work to counter this with a VDSL2 Essentials product at £26.99/m during the minimum term, but this is still more expensive than TalkTalk and Vodafone. Another possibility is that BT retail customers has increased but ongoing moans around billing at Plusnet has negated any gains elsewhere.
The big news is really in the local loop company where the number of connections continues to grow:
- FTTC connections now at 12,330,000 an increase of 439,000 in the quarter
- Non fibre down to 8,403,000 a decrease of 492,000
- Fibre to the Premises 352,000 up 46,000
- G.fast 36,000 up 11,000
These are live connections where people have ordered and the service is installed. Our prediction for G.fast based on what we saw speed test wise in the last quarter was a range from 38,000 to 48,000 premises so not perfect suggests that if these figures were to vanish from the results we could at least give a reasonable idea of what is going.
Of course to judge how popular or not the services are you need to know how many premises are passed and it is the G.fast and FTTP figures that are of interest.
- Fibre to the Premises 1,514,000 premises up 294,000 premises in the quarter
- G.fast 2,166,000 premises up 146,000 premises in the quarter
The results don't explicitly say whether the change in the sales rules from 100 Mbps minimum speed to 120 Mbps on G.fast has been accounted for but the increase in premises passed is slower than the last quarter so either they are slowing down or pace increased and was set back by the change (our assessment of the impact is the change dropped the footprint by 200,000 premises).
The simplistic and incorrect view to take is that FTTP is more popular than G.fast, i.e. 23.2% takeup versus 1.7%. The reason we say incorrect is because FTTP has been around for a lot longer and with the increasing FTTP only footprint from new build homes and gap funded roll-out to rural areas these factors are going to give a FTTP a much higher take-up. When we look at G.fast areas versus FTTP in areas with similar speeds of VDSL2 the pattern is very similar, i.e. people are not racing to buy FTTP as soon as it appears in an area, reasons such as limited retailer choice (i.e. only one of those that runs TV adverts) and perceptions that FTTP is expensive is not helping.
The Openreach FTTP roll-out pace is critical as this will dictate if the four million premises target for March 2021 is reached and the reported pace is around 20,000 per week but by the end of the financial year they intend to have scaled this up to around the 30,000 per week point. On the costs given that the Fibre First roll-out is distinctly dense urban areas a low end per premises cost £300-400 is stated - we should add that if the take-up in Fibre First areas remains at similar levels to G.fast even this low cost is not sustainable, hence the bulk migration plan that is being constructed for Salisbury. The results of this exercise will be key to informing any timescales for eventual copper recovery.
Pulling out our on figures on premises passed the total today for Openreach FTTP is 1,388,001 and G.fast is at 1,780,063 premises passed. The FTTP increase is 261,295 premises in the last quarter and G.fast increase was 27,382. The G.fast increase was minimal due to the drop of 200,000 premises from the 100 to 120 Mbps rule change. On the take-up of the services one interesting exercise we did was not adding the FTTP on Kenton Road (Harrow) exchange to our systems until this week (Openreach has declared the exchange complete) in the months since they started building we have not seen an obviously Openreach FTTP speed test on the exchange (i.e. ultrafast or significantly better than the expected VDSL2 speed for the postcode). Our overall figures continues to lag the Openreach supplied figures by around 8 to 10 weeks of build, but some of this we believe is accounted for by quirks that they say some exchanges are in build but we have not found premises released for actual orders.
Our projection for the date the 4 million premises passed with FTTP will be reached is around September 2021, if Openreach does increase its roll-out pace to 30,000 premises per week this date should get closer to the goal of 31st March 2021.
To end the coverage of the results one snippet that popped out was a short comment that seems to suggest BT Group aka Openreach thinks it might be possible that public money will only be needed to cover the most expensive (i.e. rural) 10% of premises with FTTP in the UK. The Openreach aim if the conditions are right is still to try and build to 15 million premises for 2025, the debates with Government (and once Government has made it policy Ofcom will be onboard one assumes) about reaching for 100% i.e. over 30 million premises will hopefully have already started. Of course it is possible that the Government may favour someone other than Openreach to be the biggest operator in the push for 100%.