BT Raise UK Ultrafast Broadband Cover to 5.81 Million Premises

BT has today published their Q1 2020/21 results, which reveals that Openreach has expanded their “ultrafast broadband” ISP network to cover 5.81 million UK premises (up from 5.4m last quarter) and that includes 2.98m on FTTP (up from 2.57m) and 2.83m on G.fast (up from 2.81m). Plus 5G via EE is now live in 100 cities and towns.

Broadly speaking most of the news since BT’s last quarterly update has tended to focus on the strong progress being made by Openreach to roll-out Fibre-to-the-Premises (FTTP) technology across the United Kingdom (examples here, here and here). Similarly EE has also continued to expand their 5G mobile network to more areas, although the Government’s move to ban Huawei from new 5G deployments will cause delays (here).

Otherwise the main developments over the past quarter have included an expanded FTTP supplier agreement with Nokia (here) and the addition of ADTRAN as a third strategic supplier for that same network (here). On top of that Openreach has tried again to deploy G.INP on to FTTC lines (here) and confirmed that their roll-out of hybrid fibre G.fast technology will remain shelved for at least the next year (here).

Most recent BT has also scooped another contract to help extend FTTP vs Openreach across more of Wales (here), which is worth £30m and should reach an additional 13,000 premises in mostly rural areas. We should also add that Openreach intend to stop selling copper products to c.1.2m FTTP enabled premises in 117 exchange areas from June 2021 (here); Ultrafast services (including FTTP and Gfast) will be available to more than 75% of premises in these locations by that date.

Financial Highlights – BT’s Quarterly Change
* BT Group revenue = £5,250m (down from £5,632m)
* BT Group profit after tax = £448m (up from £208m)
* BT Group total net debt = £18,157m (increased from £17,969m)

The KPIs for BT’s results also reveal that the total gross BDUK grant funding deferral (clawback) included in capacity/network was £788m (unchanged). This reflects public money that can often be returned by BT and reinvested by local authorities to help boost “superfast broadband” coverage (currently at nearly 97% for 24Mbps+). A good chunk of this has already been re-invested into such contracts.

Sadly BT no longer provide customer figures for their own retail broadband ISP, although we note that 81.8% of their consumer broadband base now take a “superfast broadband” service (up from 79.7% last quarter – mostly FTTC) and this drops to just 2.5% (up from 2.4%) for their “ultrafast broadband” (FTTP/G.fast) products. We’re a little bit surprise that ultrafast isn’t growing faster.

Openreach’s Network

The table below offers a breakdown of fixed line network coverage and take-up by technology on Openreach’s national UK network, which covers the totals for all ISPs combined (e.g. BT, Sky Broadband, TalkTalk, Zen Internet, Vodafone etc.).

Otherwise the roll-out of full fibre lines remains the dominant one amongst the two “ultrafast” technologies, with FTTP adding +404,000 premises (down from +419,000 last quarter) and hybrid fibre G.fast adding just +17,000 premises (down from +89,000 last quarter).

We should point out that the increase in FTTP coverage is particularly notable given that the April – June period was heavily affected by COVID-19, which makes this outcome more impressive than it may seem. Meanwhile G.fast was placed under review last year (here) and its roll-out has now been suspended in favour of FTTP (this will be reviewed again in March 2021 but is unlikely to change).

The results also confirm that take-up of FTTP is now 18.6% (down from 20.35% last quarter), while G.fast stands at just 3.46% (up from 2.84% last quarter). But such figures don’t tell the whole story since, until recently, both technologies had been ramping up their deployments, which means adoption is likely to trail (i.e. it’s dynamically impacted by lots of factors like consumer choice, awareness and deployment pace).

We expect to see take-up of G.fast climb now that its roll-out has effectively stopped, while Openreach’s plan to ramp-up their FTTP deployment (target to cover 20 million UK premises by around 2025-2030) will continue to reduce the take-up measure until their build slows down. The only real way to examine take-up is to only examine areas where a technology has been live for 12 and 24 months or longer, but such data is not provided above.

Philip Jansen, CEO of BT Group, said:

“Despite Covid-19, BT delivered a strong operating performance in the first quarter and delivered a relatively resilient set of financial results. We continue to invest in the long-term future of the business. We continued to support our customers and colleagues through the crisis, including offering NHS workers on EE unlimited mobile data, and discounts for pubs and clubs on BT Sport until the end of the year.

During the quarter Openreach resumed provisioning and repair activity in customer premises, we re-opened the majority of our retail stores, and we saw the restart of the Premier League on BT Sport. Enterprise has today launched the BT Small Business Support Scheme, which will boost cash flow, connectivity and confidence among this critical segment of the economy over the coming months.

Throughout this crisis we remain focussed on delivering against our strategic goals to deliver long-term value for shareholders. We reached an important milestone with 3m FTTP premises now passed, welcomed Ofcom’s consultation on our rural FTTP build proposal, and have now deployed 5G to 100 towns and cities. Together with continued improvements in customer experience and our modernisation programme, we are positively positioned for the future.

Although uncertainties remain, we are now able to provide an outlook for this financial year. Despite our strong operational performance in the first three months of the year, it is clear that Covid-19 will continue to impact our business as the full economic consequences unfold. Beyond this year and based on current expectations, we expect to return the business to sustainable adjusted EBITDA growth, driven in part by the recovery from Covid-19.”

Finally, we should add the operator’s new 5G based mobile broadband network (EE) has now started to go live in parts of 100 UK towns and cities (up from 80 in May 2020). Separately, Openreach confirms they’re “on track” to reach 4.5 million premises passed by FTTP in time for their end of March 2021 target.

Elsewhere, the 7% fall in quarterly revenue is said to be “primarily due to the impact of Covid-19, including reduced BT Sport revenue and a reduction in business activity in our enterprise units.”