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New BT CEO Reports Ultrafast Broadband Cover of 3.2M UK Premises

Thursday, May 9th, 2019 (8:29 am) - Score 2,400
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BT Group’s new CEO has released his first full year results to the end of March 2019 (Q4 18/19 financial), which finds that Openreach’s FTTP and G.fast based “ultrafast broadband” (100Mbps+) ISP network has grown its coverage to 3.2 million UK premises (up from 2.6m last quarter). Take-up of FTTP is 24.54% and G.fast 1.24%.

The big announcement today, which we’ve covered in a separate article so as not to overflow this one, is that Openreach will now aim to deliver 4 million FTTP premises by March 2021 and 15 million by around 2025 (here). Otherwise there have been several key developments since BT’s last quarterly update in January 2019 and we’ll summarise some of those below.

Over the past few months BT has had an advert banned due to their misleading “UK’s most powerful Wi-Fi” claim (here) and they’ve been sued by property developer Persimmon for allegedly unpaid work (here). Elsewhere Openreach have been able to launch their revised cable duct and pole access product for ISPs, albeit still with some caveats (here).

In better news BT’s consumer ISP division has managed to introduce a new broadband speed guarantee (here) and Openreach have named the next batch of 12 FTTP roll-out locations (here).

Financial Highlights – BT’s Quarterly Change
* BT Group revenue = £5,853m (down from £5,982m)
* BT Group profit after tax = £513m (down from £594m)
* BT Group total net debt = -£11,035m (from -£11,114m)

Meanwhile BT’s assumptions about clawback / gainshare via the government’s Broadband Delivery UK roll-out programme remains unchanged (i.e. public money that can be returned and reinvested by local authorities to help “superfast broadband” coverage to reach around 98% of the UK by the end of 2020).

The operator’s Q2 “life-time view” of their BDUK linked contracts, which predicted that take-up of their FTTC/P network within related areas could eventually reach 61%, suggested that up to around £712m of public investment could eventually be returned for the above purpose.

BT Group’s Capital expenditure

Capital expenditure was £3,963m (2017/18: £3,522m), including network investment of £2,083m, up 21%. This includes £213m grant funding deferral under the Broadband Delivery UK (BDUK) programme, of which £168m relates to the change in base-case assumption for customer take-up announced in Q2. Excluding the effect of the grant funding deferral, capital expenditure was £3,750m.

The remaining increase in network investment reflects increased spend on our Fibre Cities programme, partially offset by lower mobile investment as the Emergency Services Network (ESN) passed the peak deployment phase. Our BDUK Gainshare provision at the end of the year was £639m.

Other capital expenditure components were up 5% with £929m spent on customer driven investments, £747m on systems and IT, and £204m spent on non-network infrastructure.

At this point we should remind readers that BT stopped providing customer figures for their own consumer broadband ISP last year (i.e. covering up for declines), although it’s noted that 72.9% of their retail broadband base now take a “superfast broadband” connection (up from 70.5% last quarter – mostly via FTTC) and this drops to 45.9% for their enterprise base.

Openreach’s Network Coverage

The table below offers a useful breakdown of fixed line network coverage and take-up by technology. Being Openreach the listed totals apply to all ISPs on their national UK network combined (e.g. BT, Sky Broadband, TalkTalk, Vodafone etc.).

Overall their hybrid fibre G.fast ultrafast broadband network now covers 2,020,000 UK premises (up from 1,708,000 last quarter) and Fibre-to-the-Premises (FTTP) covers 1,247,000 premises (up from 893,000). The FTTP rollout is now running at a faster rate (c.20,000 passed per week) than G.fast, which is an interesting reverse as previously G.fast was rolling out at a much quicker pace (the direction of travel is clear).

openreach q4 2018 network coverage and takeup

We note that take-up of FTTP is 24.54% (down from 29.9% last quarter) and G.fast 1.24% (up from 0.88% last quarter). On the surface it might seem like G.fast is struggling for take-up and FTTP is going in reverse but this doesn’t tell the whole story and would be a poor interpretation.

Both technologies are in their early roll-out phase and take-up is a dynamically scaled measurement (dependent upon many factors of consumer choice and awareness), which means that at certain stages of the rollout it may go up or even down depending upon the pace of deployment (i.e. premises passed in any given time-scale), although over time the take-up should only rise as deployments reach maturity (we’re not there yet).

G.fast only started its commercial roll-out a year ago and has made rapid progress, but adoption by ISPs has been limited (e.g. Sky Broadband has yet to offer any ultrafast packages) and those that do offer such products don’t put much or any effort into advertising it (they aren’t even on most commercial comparison sites yet). Likewise it’s fighting in the same areas as Virgin Media.

With time we’d expect the above situation to improve but take-up is something that always takes a lot of time to grow and that’s particularly true while the service is still in the rapid roll-out phase. We’d expect the picture to change once Openreach hit their c5.7million premises target by the end of 2020 but this could be scaled-back again due to the rising focus upon FTTP.

On the flip side FTTP appears to have extremely good take-up and is a more attractive product, but this must be weighed against the fact that it’s slower to deploy (takes more resources to deliver), focuses a lot more on new builds and BDUK areas (better for take-up) and is a much more established and familiar technology.

Likewise Openreach has been deploying FTTP for years and there was a long period pre-Fibre First where they could build take-up, which is now being suppressed by the increasingly rapid pace of their roll-out (we expect that to continue as they deploy ever faster and faster). So for now the message is simple, don’t read too much into the take-up figures while the technologies are in a rapid deployment phase.

As usual our own ISP Listings page has been displaying both ultrafast broadband products for a long time because we don’t force ISPs to pay a commission in order to be shown, like big commercial comparison sites do.

Philip Jansen, CEO of BT Group, said:

“BT delivered solid results for the year, in line with our guidance, with adjusted profit growth in Consumer and Global Services offset by declines in Enterprise and Openreach.

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.

Our aim is to deliver the best converged network and be the leader in fixed ultrafast and mobile 5G networks. We are increasingly confident in the environment for investment in the UK. We have already announced the first 16 UK cities for 5G investment. Today we are announcing an increased target to pass 4m premises with ultrafast FTTP technology by 2020/21, up from 3m, and an ambition to pass 15 million premises by the mid-2020s, up from 10 million, if the conditions are right, especially the regulatory and policy enablers.

For 2018/19 the Board has decided to hold the full year dividend unchanged at 15.4p per share. The Board also expects to hold the dividend unchanged in respect of the current financial year given our outlook for earnings and cash flow.”

Jansen’s message is essentially preparing shareholders for the fact that the operator will need to spend big in order to stay competitive, particularly with respect to their independent network arm Openreach (e.g. FTTP) and mobile operator EE (5G rollout is likely to cost more than 4G did, given the requirements for a denser network).

Interestingly today’s results did not include any mention of the previously predicted next round of job losses, which suggests that Jansen is still working to finalise his future strategy. Today’s announcement also included an update on Openreach’s service performance for voice and broadband products in Q4.

Overall Openreach are now offering a service provision first appointment date within 12 days to 99% of customers, an improvement from 92% in Q4 2017/18. The levels of missed appointments, where Openreach was at fault, was maintained at 1.7% over the quarter, a third fewer than last year. Openreach also met all 42 copper and fibre Minimum Service Level (MSL) measures set by Ofcom.

Openreach’s proactive maintenance programme has continued to reduce the number of faults in the UK copper network, delivering a 2% reduction over the full year compared to 2017/18. Fewer network faults combined with improved operational planning has helped increase on time repair performance for voice and broadband products from 81% in Q4 2017/18 to 86% in the same period 2018/19.

In Q4, 100% of the group’s EE and Plusnet service calls and 83% of their BT service calls were answered in the UK and Ireland, as they work towards having all call centres based in the UK and Ireland from 2020.

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Mark Jackson
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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17 Responses
  1. Avatar NGA for all

    It suggests the actual state aid receipts are £45m for the year (£213m-£168m ) which is nothing compared to hundreds of millions available. BT is then charging £213m for future cost recovery purposes. The capital deferral may or may not be spent on the network.

    The state aid receipts should be clearly stated, and accumulated Capital Deferral should also be clearly stated.

    If BT is already including these costs in its costs recovery, why is Ofcom intending to create a industry funded Broadband USO fund.

    • Avatar NGA for all

      And in Q2 BT added £176m to the Capital Deferral, so perhaps they have paid £8m to some LA. It would be to know from a shareholders and customers perspective whether these funds reach the network as intended or a payment which is capitalised and charged as if it was spent on the network.

      The £8m is BT’s Capital contribution to allowable costs for 100k customers, a project like Cumbria’s.

    • Avatar Kits

      Interesting will have to monitor the information I get before the next AGM.

    • Avatar CarlT

      USO probably being treated separately as Ofcom can’t force cash-strapped councils struggling to fund little things like their statutory obligations for social care to spend it on fibre to the farm and hamlet.

      Local authorities have rather bigger priorities for these windfalls than spending a few thousand pounds per home subsidising ultrafast.

    • Avatar NGA for all

      CaslT Perhaps but consider original goal, average the costs, is it appropriate costs are being added to the cost recovery stack where those costs are not invested in the network, while yet more costs will be added when another source of funding is identified? Much of the EU, Central funding and BT funding(?) should only be for fixing connectivity.

      If LA’s recover their direct contributions there still seems plenty to go further provided the resource can be orchestrated. Less than 600,000 rural to go, quite a doable task. The rest of the problem are pockets in urban.

    • Avatar Gadget

      I’m not sure the contracts are written, or the finances structured in such a way as to allow one of the funding parties to do something different to the others.

  2. Avatar A_Builder

    I suspect that most ISP are cautious about GFast as it is a mixed bag. GFast also has a built in sunset of copper switch off so ISP will be wondering about wether it is worth the bother of getting involved at all.

    I am certain however that pretty much all ISP will start to resell OR FTTP as that is going to be an enduring product.

    The lower FTTP take up is probably as the build accelerates there is a lag between getting fibres to the poles/chambers and getting the last drops etc done. As well as maybe pressure on the last drop line teams (nice to be dong something other than patch and mend).

    As a shareholder I would be pretty pleased with 30% (ish) take ups at this stage as the levels will only come up. And with the levels of FTTP coming up the time and money wasted on patch and mend goes down.

    BT/Or finally on the right track.

    • Avatar CarlT

      Take up drop is at least partially the increase in brownfield build over VDSL. Previously the vast majority was new build where there was no copper or it was the only superfast option. No surprise it’s dropped.

  3. Avatar Thomas

    4 Million, don’t make me laugh. Im Still waiting on Openreach/BT to cover the rest of my new housing estate in Manchester. They have only bothered to do half the estate yet their and BTs checker claims it is available to all of us, which it isn’t.

    Article due in the local paper about the fiasco on Monday, the developer is not happy either after paying them already only to find half the houses never got hooked up.

    • Avatar gerarda

      A 25% take up of 3.2m premises “passed” means nearly 2.5m premises are not connected. Even though Openreach are ramping up the FTTP training of their engineers I guess the waiting list would be several years long if all the remaining 2.5 million decided to place orders now

    • Avatar John

      OpenReach install what the developer orders.

      If it’s a new housing estate and you have a copper line then that’s because your developer ordered a copper line.

      It is then the developers responsibility to pay for an FTTC cabinet for those lines if none exists.

      OpenReach will install FTTP for free on new developments of 30 or more houses. The developer needs to order this prior to construction though.

      I’d be amazed if your situation wasn’t simply that OpenReach installed what the developer ordered and now the developer is telling you it is OpenReach’s fault.

    • Avatar Alex

      Interesting… what housing estate is that then? Maybe someone like Hyperoptic can nip in and finish the job!

    • Avatar CarlT

      Clearly your estate in Manchester dooms the other 2.8-odd million premises to failure, Thomas.

    • Avatar CarlT

      No-one said anything about 3.2 million premises of FTTP, Gérard.

      I’m sure if all those passed by Hyperoptic, Virgin Media or Gigaclear ordered they’d be in for a wait too: what’s your point?

      Should Openreach maybe hire and train enough people to perform 30,000 FTTP installs a week just in case and leave 20,000 of them doing nothing?

  4. Avatar Gary

    Indeed Take up numbers have so many variables its a tricky statistic, In any area of overbuild be that Virgin cable or FTTC there’s going to be a lot of ‘passed’ subscribers who simply don’t want/need faster especially at a cost.

    On the flip side If they went truly rural the take up numbers are potentially going to look great as a percentage (pure guesswork by the way) as the lure from dire adsl to fttp should be better, But the number of premises passed for the expenditure would be much lower.

  5. Avatar blakes7

    “Clearly your estate in Manchester dooms the other 2.8-odd million premises to failure, Thomas.”

    If only it was only his Estate a similar situation occurred on an Estate in Surrey. A redevelopment of 14 prior abandoned properties, which the developer paid Openreach to supply FTTP and they did not. Was not until it made the regions local TV news that the residents there finally got what had been paid for and some Openreach spokes person apologised for the cough ‘delay’. Funny they denied it for almost a year until invoices were provided and the media started to get involved. Likewise during all that time the various checks on ISP sites and BT all said it was available when it was not.

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