BT Group results for Q3 2019/2020
The end of another quarter and BT Group is declaring that as of 31st December 2019 Openreach had passed some 2,156,000 premises with full fibre. The financial results also provide an opportunity to assess the take-up of the service and some 465,000 premises are connected using the Openreach FTTP service a rise of 61,000 premises in the quarter.
BT delivered results slightly below our expectations for the third quarter of the year, but we remain on track to meet our outlook for the full year.
We continue to invest in the business. During the quarter we launched Halo, the UK’s ultimate converged plan, which will give homes and businesses the best connection and service. We’ve continued to use our national scale and local presence across the UK to provide customers with the best possible experience, for example by meeting our promise to answer all customer calls in the UK and Ireland and bringing BT sales and service back to the high street in nearly 500 BT/EE stores.
Underpinning the ongoing development of market-leading propositions, we continue to invest in the best converged network. We welcomed the direction of Ofcom’s recent consultation, which is an important step forward towards a widely-shared ambition to invest in fibre across the whole of the UK. We’re also investing in 5G, making it available in over 50 locations, with the first customers enjoying a great experience.
The security of our network is paramount for BT. We therefore welcome and are supportive of the clarity provided by Government around the use of certain vendors in networks across the UK and agree that the priority should be the security of the UK’s communications infrastructure. We are in the process of reviewing the guidance in detail to determine the full impact on our plans and at this time estimate an impact of around £500 million over the next 5 years.
I’m really excited about the long-term prospects for this great company and I‘m confident our plans will enable us to be bolder, smarter, and faster to ensure that we remain successful and create a better BT for the future.Philip Jansen, BT Group Chief Executive
Openreach generated some £1.281 billion of revenue on the quarter a 2% rise, with the FTTP customers contributing £27 million i.e. an average of £19.35 per month. The FTTC customer based raised some £263 million of revenue an average of £6.58/m so FTTP is generating higher levels of revenue but with the levels of investment needed it is still a long game when thinking about generating actual profits from the FTTP roll-out.
The key figures are:
- FTTC connections now at 13,310,000 12,854,000 an increase of 456,000 in the quarter, down compared to previous quarter when 524,000 connections were added
- Non fibre connections down to 7,334,000 7,859,000 a decrease of 525,000
- Fibre to the Premises number of connections at 465,000 up 61,000
- G.fast live connections is 68,000 up 17,000
The actual take-up figure for FTTP has dropped slightly and is at 21.6% compared to 22.3% and 23.2% in the previous two quarters, but with the accelerated roll-out pace this is to be expected and with the signs that 2020 will have Vodafone, TalkTalk and Sky onboard and selling the service this trend may reverse. Take-up is going to also be vastly different in different types of Openreach FTTP area e.g. in fibre only locations take-up is going to probably be in the region of 90% but in the urban Fibre First areas take-up is looking lower from our own data and seems to be mirroring the demand that G.fast is showing.
Take-up of G.fast at 68,000 connections from the 2,725,000 premises passed is down at 2.5%, but when you remember that people who can get G.fast will have access to FTTC at speeds of 60 Mbps and faster and invariably Virgin Media cable services you can see why take-up is looking lower.
If Openreach is deploying FTTP at the declared 26,000 premises each week, then actual footprint as of 30th January 2020 is around 2,260,000 premises passed. A build pace of 104,000 premises each month suggests a footprint of 3,716,000 premises as of 31st March 2021, so the build rate needs to continue to accelerate to hit 4 million premises on that date. One of the problems we have in tracking the Openreach FTTP footprint is that there are some areas considered built, but the premises have not been released to the wholesalers as yet.
Again no actual customer numbers, but using the fixed line revenue and ARPU last quarter we calculated a footprint of 9,748,000 customers and doing the same this quarter suggests 9,720,000 fixed line customers which is a drop. There are also a drop in the ARPU from £38.5/m to £38.2/m, which we would have expected to increased the customer number estimate, so it does suggest that the fixed line competition is seeing some people leaving BT Consumer for other providers.
The split between standard, superfast and ultrafast broadband customers has improved with 77.1% using a superfast service and 2.1% an ultrafast product. The remaining 20.8% are on ADSL/ADSL2+ though the use of the superfast moniker clouds things, since is a VDSL2/FTTC customer with a sync speed of 15 Mbps counted in the superfast or standard figures?
The jump in the ultrafast customers from 1.6% to 2.1% is encouraging and with G.fast and FTTP retail pricing now down at the around the same price as the fastest VDSL2 options this figure is something we expect to increase the next quarter.