BT Results See Openreach Near 10 Million FTTP Premises Milestone

The BT Group has today published their latest Q3 FY23 results to December 2022, which saw the coverage of Openreach’s Fibre-to-the-Premises (FTTP) broadband ISP network reach 9.57 million premises (up by 810k in the quarter vs 805k last quarter) and EE increase their 5G customer based to 8.5 million (up from 8.157m).

As usual, it’s been another busy quarter of developments for BT. Firstly, the CEO of BT’s Consumer division, Marc Allera, warned that social broadband tariffs may become unsustainable (here) and the provider is also set to restart the rollout of Digital Voice services during the spring of 2023 (here).

Meanwhile, EE became the first mobile operator to use Freshwave’s new small cell based mobile network in central London (here) and BT Wholesale deployed a new Cloud Radio Access Network (C-RAN) in Leeds (here). BT’s staff also voted to accept a pay offer, which ended a period of national strikes (here).

As for Openreach, the network access operator announced plans for further price cuts to their FTTP products (here), which attracted a competition complaint from rival Cityfibre (here). At the same time, the operator has also moved to increase the prices on their older copper line products (here) and some Ethernet services (here).

Finally, Openreach added another 12 locations to their FTTP rollout programme (here) and are looking to re-open their Fibre Community Partnership (FCP) scheme to new applications during the start of this year (here). Furthermore, they’re also trialling a new ‘Shallow Build’ approach to extending their network (here) and have warned that they may restrict broadband speeds and calls for those on older copper services to encourage upgrades (here).

The good news is that Openreach’s latest figures mean they’ll pass the 10 million premises milestone for FTTP coverage in the current quarter (roughly 40% of the UK). For those who remember, the previous generation of FTTC (VDSL2) technology reached a similar level all the way back in May 2012 (here).

Financial Highlights – BT’s Quarterly Change
* BT Group revenue = £5,212m (up from £5,151m)
* BT Group total reported net debt = £19,226m (increased from £19,042m)
* BT Group profit after tax = £427m (no data for prior quarter)

BT’s (EE) consumer division doesn’t publish full customer figures for their own retail provider, but they do report data for their “ultrafast broadband” (100Mbps+) packages and mobile service. The consumer ISP stated that they had 1.559 million FTTP customers (up from 1.404m last quarter) and EE’s “5G Ready” base now stands at 8.505 million (up from 8.157m).

Meanwhile, some 77% of BT’s fixed consumer base take a “superfast broadband” product (down from 78.2% last quarter) and 14.7% (up from 12.9%) have adopted one of their “ultrafast” products – including both G.fast and FTTP. We also noted that 21.6% of BT’s customers are now taking both mobile and broadband (converged) – down slightly from 21.7%.

Openreach’s Network

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

As usual, the rollout of their Fibre-to-the-Premises (FTTP) lines continues to grow, with 810,000 premises being added in the quarter (up from 805,000 last quarter). As for take-up, some 2.729 million FTTP broadband connections have been made on Openreach’s network (up from 2.405m), which equates to a take-up of 28.51% (up from 27.45% last quarter).

The rapid rollout of a new network almost always tends to suppress the take-up figure, thus Openreach continues to do extremely well to buck that trend – all despite an increasingly significant amount of competition from rival networks. This goes to show the challenge AltNets are facing in peeling consumers away from the resident industry giant.

Philip Jansen, CEO of BT Group, said:

“We’ve grown revenue and EBITDA on a pro forma, like-for-like basis, despite a challenging economic backdrop, and we’re transforming BT Group for the benefit of our customers. We continue to accelerate our investments in the UK’s leading next generation networks; we’re combining our Enterprise and Global operations to create BT Business, a single, strengthened B2B unit; and we’re going further on cutting costs to deliver £3 billion in annualised savings by the end of FY25.

On full fibre, we’re building – and now connecting – like fury: 9.6 million premises reached to date, with 29% already connected, and our 5G mobile network now reaches 60% of the UK population.

In December we awarded a cost-of-living pay rise to 85% of our UK colleagues, reaching an agreement with our union partners that we will all lean into our ongoing transformation plans. Despite extraordinary energy costs and other inflationary headwinds, we are reaffirming our outlook for the year.”

Overall, BT noted that customer demand for FTTP from Openreach was extremely strong, with orders up 51% year-on-year. On take-up, the operator also noted – deep within their report – another interesting figure, which stated that almost 50% of the Openreach broadband base where they built the new network 24-months ago are now on FTTP. Investors are going to like that, but rivals.. not so much.