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BT Lifts Profit on Pandemic, Sheds Jobs to Cut Costs

Thomas Seal
·2 mins read

(Bloomberg) --

BT Group Plc earned more than expected in the second quarter after people working from home across the U.K. flocked to buy fiber broadband. It also cut thousands of jobs while promising a dividend for investors.

London-based BT reported adjusted earnings before interest, tax, depreciation and amortization of 1.91 billion pounds ($2.49 billion) in the second quarter, versus 1.82 billion pounds estimated by a consensus of analysts compiled by Bloomberg.Second-quarter revenue was 5.36 billion pounds, against a consensus estimate of 5.41 billion.

Key Insights

Weekly orders for fiber broadband almost doubled from pre-lockdown to 13,000 in September. That and rebates on sports rights helped BT narrow its full-year earnings guidance to the upside. It sees Ebitda between 7.3 billion pounds and 7.5 billion pounds and that growth will take that to “at least 7.9 billion pounds” by 2022/23.Chief Executive Officer Philip Jansen said restructuring is “firmly on track” and delivered 352 million pounds in savings in the period.The group cut 3,600 full-time roles in the first half. Jansen needs cash to reinstate BT’s dividend, pay for a nationwide fiber optic network upgrade, and finance BT’s pension plan, the U.K.’s largest in the private sector.BT said it’s considering alternative ways to fund its deficit which include giving the plan “a prior claim over certain BT assets”.It cited expected increases in stock levels ahead of Dec. 31, when Huawei equipment is banned and the U.K. will leave the European single market and customs union. The statement notes a “final purchase of necessary Huawei equipment, including spares.”Britain’s former telecom monopoly bolstered its takeover defenses this summer as its market value sank to decade lows.

Market Context

BT shares rose as much as 9.2% to 111 pence in London on Thursday.The stock has fallen 47.2% since the start of 2020 through Wednesday’s close, versus a fall of 26% in the FTSE 100.Of analysts surveyed by Bloomberg, 14 rate the stock a Buy, 8 a Hold, and 1 a Sell.

Get More

StatementOct. 15: Ofcom Opens Probe on BT’s Compliance as Broadband ProviderOct. 9: BT Shares Rise; Analysts Positive on ‘Reassuring’ BriefingSep. 29: Nokia Expands 5G Deal With U.K.’s BT to Fill Huawei Void

(Updates with details from BT statement, shares)

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©2020 Bloomberg L.P.

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