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BT Ultrafast Broadband Covers 886K UK Premises as Pay TV Shrinks

Friday, February 2nd, 2018 (7:45 am) - Score 3,203

BT has released their latest results to the end of 2017 (Q4 calendar), which saw their retail UK broadband ISP base add 35K subscribers to total 9,342,000 (vs +22K in Q3). Meanwhile their FTTP and G.fastultrafast broadband” (100Mbps+) services reached 886,000 premises (up from 770K).

As usual the operator also includes an update on their capital expenditure and clawback (gainshare) from the Government’s Broadband Delivery UK roll-out scheme (i.e. public investment returned by BT due to rising take-up in FTTC/P covered areas), which reveals that £527m (up from £477m last quarter) of public funding may potentially become available for reinvestment into further UK coverage of “fibre broadband” services.

In addition, BT said that their base-case assumption for take-up in BDUK areas had risen from 39% of total homes passed to 40%. The Government intends to use this reinvestment to help push the coverage of “superfast broadband” to approximately 98% of UK premises by around 2020 (here).

Financial Highlights – BT’s Quarterly Report
* BT Group quarterly revenue = £5,970m (up from £5,951m in Q3 2017 calendar)
* BT Group reported profits before tax = £660m (down from £666m)
* BT Group total net debt = £8,923m (down from £9,520m)
* BT Wholesale quarterly operating profit = £110m (up from £109m)
* Openreach quarterly operating profit = £305m (up from £277m)
* Openreach quarterly capital expenditure = £477m (up from £397m)

Otherwise the main changes since the last report have been the launch of BT’s new “ULTRAFAST Fibre” (G.fast and FTTP) based broadband packages (here) and yesterday’s announcement by Openreach of a faster roll-out plan for “full fibre“, which will see their FTTP technology cover 3 million UK premises by 2020 instead of the previous target for 2 million (here).

BT Consumer / Retail

The retail side of BT’s broadband business still holds the single largest share of “fibre broadband” (FTTC/P) subscriptions on Openreach’s national UK network, which saw them add a respectable 208,000 customers in the quarter to total 5.492 million.

Meanwhile BT’s mobile base (EE) grew and their 4G subscribers jumped from 19.4 million last quarter to 19.6 million now. We also note that for the first time BT’s Pay TV (IPTV) base has begun to shrink, losing -5,000 customers in the quarter.

Broadband Subs TV Subs Mobile Subs + EE
Fibre Subs
Q4 2017 TOTAL
9,342,000 1,760,000 29,762,000 5,492,000
Subs Change (Q4) +35,000 -5,000 +40,000 +208,000
Q3 2017 TOTAL
9,307,000 1,765,000 29,736,000 5,285,000
Subs Change (Q3) +22,000 +7,000 -45,000 +179,000

On top of all that BT also reported that EE’s geographic (landmass) 4G network coverage of the United Kingdom has now reached 90% (up from 86% last quarter) and they aim to cover 95% by the end of December 2020, although the latter aim doesn’t get a mention in today’s report.

Openreach & Wholesale

Openreach’s national telecoms and broadband network serves various ISPs across the United Kingdom, including BT itself (i.e. the total broadband and “fibre” lines listed below combine customers from BT’s own service as well as many other ISPs).

At present the operator’s “fibre” network covers 27.4 million UK premises (up from 27.1m in the last quarter) and the majority of those are reached via their slower ‘up to’ 80Mbps capable FTTC (VDSL2) services. Around 886,000 of that total can now also access an FTTP or G.fast based “ultrafast broadband” (100Mbps+) connection, which is up from 770,000 last quarter.

G.fast is still in the pilot stage but should cover 1 million premises by the end of March 2018, before rising to 10 million by 2020 (the total rises to 13 million when FTTP is included). The recent launch of BT’s commercial ‘ULTRAFAST Fibre‘ packages show that this service is now starting to go mainstream.

Note: This time around we’ve stopped tracking unbundled (LLU) lines because the fibre figures are now more important. Unbundled lines are mostly used by ISPs that have installed some of their own kit inside Openreach’s network in order to gain more control over their products and prices, although they’re of more use for the older generation of copper based services.

Total UK Broadband Lines (ADSL, Fibre)
Fibre Lines (FTTC / FTTP / G.fast)
Q4 2017 TOTAL
20,645,000 9,241,000
Lines Change (Q4) +157,000 +600,000
Q3 2017 TOTAL
20,489,000 8,640,000
Lines Change (Q3) +64,000 +505,000

It’s worth noting that the quarterly increase of +600,000 in new “fibre broadband” (FTTC/P) lines also includes the +208,000 added via BT’s own ISP. The outcome means that BT’s rivals accounted for +392,000 of the total increase (up from +326K last quarter). Separately, BTWholesale delivered a total of just 863,000 external broadband lines for other ISPs, which is down by -14,000 in the quarter.

Gavin Patterson, CEO of BT Group, said:

“Our third quarter financial results are broadly in line with our expectations and we remain confident in our outlook for the full year. We continue to improve our customer experience metrics across the Group, with our sixth successive quarter of improved customer perception.

We continue to work closely with the UK Government, Ofcom and our customers to expand the deployment of fibre and Openreach recently announced plans to accelerate our FTTP deployment to three million premises by the end of 2020.

We agreed a reciprocal wholesale deal with Sky that will deliver market leading sports and entertainment channels to our BT TV platform by early 2019, reinforcing our strategic goal of being the best provider in the UK of converged network services.

The triennial valuation of the BT Pension Scheme is proceeding and constructive discussions continue with the BTPS Trustee. We still expect to complete the valuation in the first half of the 2018 calendar year. Our aim remains to deliver fair, flexible and affordable pensions to all of our employees.

We are delivering against our strategy, capitalising on opportunities and responding to market challenges with a robust set of actions. Looking ahead, we’re confident in the steps we are taking to improve the performance of BT for all our stakeholders.”

The biggest challenges for BT in 2018 are likely to centre around a combination of the outcome from Ofcom’s current wholesale market reviews (related price changes and new regulation etc.), the Government’s final design for the 10Mbps Universal Service Obligation (USO) for broadband connectivity and Openreach’s on-going efforts to agree a Network Strategy for bringing FTTP to 10 million premises by 2025.

On top of that they’ll also be bidding on a number of the forthcoming auctions for new radio spectrum bands (2.3GHz and 3.4GHz), which Three UK are still trying disrupt. Lest we forget Ofcom’s second attempt to introduce a Dark Fibre Access (DFA) remedy for Ethernet services at and below 1Gbps from April 2018 until April 2019 (here).

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By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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14 Responses
  1. wirelesspacman says:

    “Meanwhile BT’s mobile base (EE) continues to shrink”

    Really? 🙂

    1. Mark Jackson says:

      Looked at the wrong column, corrected 🙂 .

  2. NGA for all says:

    Mark – did you just add the £50m to the £477m acc Deferral last time or is there a reference to the £527m, £50m for 1% on a base of 4.5m premises is great to see! The Deferral is growing quicker than BT is biling subsidy.

    1. Mark Jackson says:

      Here’s the full text from BT’s results.

      Capital expenditure

      Capital expenditure was £878m (Q3 2016/17: £852m). This consists of gross expenditure of £886m (Q3 2016/17: £863m) which has been reduced by net grant funding of £8m (Q3 2016/17: £11m) mainly relating to our activity on the Broadband Delivery UK (BDUK) programme. The capital expenditure increase of £26m was primarily a result of increased investment in our fixed and mobile networks which was up £45m at £465m. Other capital expenditure components were down £19m with £232m spent on customer driven investments and £157m on systems and IT.

      Our base-case assumption for take-up in BDUK areas has increased to 40% of total homes passed and we will continue to assess this each quarter. Under the terms of the BDUK programme, we have an obligation to repay or re-invest grant funding depending on factors including the level of customer take-up achieved. While we have recognised gross grant funding of £58m (Q3 2016/17: £45m) in line with network build in the quarter, we have also deferred £50m (Q3 2016/17: £34m) of the total grant funding to reflect higher take-up levels on a number of contracts. To date we have deferred £527m (Q3 2016/17: £325m).

    2. MikeW says:

      Yeah, the occasions that BT increase the base-case assumption %age usually result in a large amount of extra deferral.

      40% now. That’s double the original!

    3. NGA for all says:

      Mark, Thanks
      Mike W – 1% driving £50m? The capital owed is emerging here or must be! Apart from the first £130m for the first 10% increase, then rest of the £527m looks to be tied down. Increasing the size of the intervention area does not have a big impact even if we include 1m premise VM overbuild.

    4. Fastman says:

      Increasing the size of the intervention area does not have a big impact even if we include 1m premise VM overbuild. not sure how 1m virgim media premies could be in any intervention area — may be the off view where part postcode but would have though they would have decreased and and changed to black under project lightning

    5. MikeW says:

      A regular quarter, with no change in base-case assumptions, results in additional deferral of anything from £12m to £32m. We need to taker that off that £50m first.

      That means the additional deferral due to the changing assumption is likely to be between £20m and £40m, rather than the full £50m.

      Previous changes seem to have resulted in deferrals of up to £20m per percentage point.

      I also guess that each change now generates a higher deferral amount per percentage point, as the coverage has increased, and the gross grant has increased. There’s just more older coverage to have to re-calculate each time

      Yeah – I think partial coverage is the explanation. When BT have earmarked a cab for BDUK upgrade, then everyone can take advantage of the upgrade (across perhaps 10-20 different postcodes), even if VM only left out maybe 2 of the postcodes.

      I don’t think anywhere has changed status to black from project lightning … as VM didn’t include it in any responses to the councils.

    6. CarlT says:

      BT can’t bill for premises where VM have a presence so this shouldn’t really be an issue.

      VM haven’t built a million premises of Lightning full stop yet alone in areas awaiting BDUK deployments. The idea that they are going to have a large amount of build in areas left out of both BT’s commercial build and the first wave of BDUK builds seems strange.

      VM like densely populated areas on or near existing networks. These same areas are relatively cheap for FTTC builds even where the PCPs themselves pass relatively few premises.

  3. MikeW says:

    Looking at the deferral from another perspective…

    BT have now deferred a total of £527m, as a result of raising the assumption by 20%. That’s £26.4m for each percentage point increase.

    That fits, if this quarter had a “normal” deferral of £23.6m; well within the range I mentioned in the previous post.

    Also note that when the original £130m was calculated, the rollout was half its current size, and the increase in the assumed-takeup was half the current amount too. Hey presto … £130m is a quarter of the current total (ie a half of a half). This maths malarky isn’t magic.

    Look at it another way… If BT stuck to the first 20->30% assumption, that £130m would have probably grown to £260m now.

    1. NGA for all says:

      MikeW – either way it is great opportunity to build more network. But if it includes some of the BT Capital, as a Capital Deferral would permit, it ought to allow more change requests on the existing contracts, rather than iterative procurements for non-contiguous infill activity.

      CarlT – I think you find the bills get submitted anyway and get paid. You just pay more per premise in the non VM Post codes. It would be good to see an adjustment for this put in the public domain.

    2. TheFacts says:

      @NGA – what does a typical bill have on it? What items?

    3. NGA for all says:

      @Facts as per the allowable cost schedule.

    4. TheFacts says:

      @NGA – which is?

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