{"id":22210,"date":"2020-05-07T07:56:35","date_gmt":"2020-05-07T06:56:35","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=22210"},"modified":"2020-05-18T08:14:01","modified_gmt":"2020-05-18T07:14:01","slug":"bt-invest-12bn-on-fttp-broadband-for-20-million-uk-premises","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2020\/05\/bt-invest-12bn-on-fttp-broadband-for-20-million-uk-premises.html","title":{"rendered":"BT Invest \u00a312bn on FTTP Broadband for 20 Million UK Premises"},"content":{"rendered":"

The BT<\/a> Group has today published their Q4 2019\/20 (financial) results and announced a tentative “target<\/em>” to boost the national roll-out of their “gigabit-capable<\/em>” Fibre-to-the-Premises (FTTP<\/a>) broadband ISP network, which could see Openreach<\/a> reach 20 million UK premises by the “mid – to late-2020s<\/em>.”<\/p>\n

At present Openreach<\/a> are already well on their way to achieving their initial goal of 4 million premises (homes and businesses) passed with “full fibre<\/em>” (FTTP<\/a>) by the end of March 2021 (they’ve so far completed 2.6 million premises<\/strong>), which was previously expected to be followed by 15 million around 2025. Suffice to say that today’s news could be seen as an extension of that plan, adding another 5 million in the 2025-2030 period.<\/p>\n

NOTE:<\/strong> Openreach<\/a> said they’re currently building 1Gbps FTTP<\/a> at a rate of 32,000 premises passed per week (up from 27,000 last quarter).<\/div>\n

Previously the operator had made clear that their future deployment strategy is contingent upon changes from Ofcom<\/a> and the Government, such as access to easier wayleaves, protection for their investment and a longer business rates holiday on new fibre. Today’s announcement also confirms that in order to do that, as well as roll-out 5G<\/a> and tackle the impact of COVID-19, they’ve had to take the “difficult decision to suspend the dividend until 2022 and re-base thereafter<\/em>.”<\/p>\n

Interestingly the new results state that BT<\/a>’s current FTTP roll-out will reach 4.5 million premises by March 2021, which is above their current target and perhaps reflects the need to ramp-up deployments further in order to hit the new goal. The operator also expects to maintain an impressive “average build cost of \u00a3300-\u00a3400 per premises passed across [the] 20 million<\/em>,” but obviously some of their more rural roll-outs will exceed that.<\/p>\n

“The gross build costs in schemes supported by public subsidy – which we also expect to contribute to the 20m plan – are significantly higher than this range. The build cost of FTTP deployed at new housing sites which also contributes to the 20m is also higher since the build and provision stages are typically collapsed into one phase and there is less existing passive infrastructure available to use<\/em>,” said BT<\/a>.<\/p>\n

Philip Jansen, BT Group CEO, said:<\/strong><\/p>\n

“Of course, Covid-19 is affecting our business, but the full impact will only become clearer as the economic consequences unfold over the next 12 months. Due to Covid-19, BT is not providing guidance for 2020\/21, at this time.<\/p>\n

BT has the best network infrastructure in the UK. We have the leading 4G<\/a> network and are rapidly expanding our leadership position in 5G<\/a>, that today covers over 80 towns and cities. We have the largest and most extensive fixed network and are leading the UK on the next generation Fibre-to-the-Premises (FTTP) network where we now pass 2.6 million premises. Today we are announcing a rapid acceleration of our FTTP build with a target of 20 million premises passed by the mid- to late-2020s, including a significant build in rural areas. After passing 1.3 million premises last year, we are aiming at over 2 million in 2020\/21, and envisage a maximum build rate of 3 million premises per year. Our FTTP investment should deliver pre-tax nominal returns of between 10% to 12% and is based on a regulatory framework consistent with Ofcom<\/a>\u2019s preferred policy direction and continued support for infrastructure investment and competition.<\/p>\n

The continued delivery of market leading customer experiences remains core to our success, with a focus on driving the take-up of converged product offerings such as Halo, our premium converged offering for homes and businesses. In the short period since launch, Halo now represents over 30% of our BT consumer broadband base.<\/p>\n

BT is delivering, but is also changing. BT needs to be leaner, simpler and more agile. Today we are announcing a radical modernisation and simplification programme that will use technology to create a better BT for the future. This 5-year initiative will re-engineer old and out of date processes, rationalise products, reduce re-work and switch off many legacy services. This next stage in the modernisation of BT will deliver gross annualised savings of \u00a32 billion over the next 5 years.”<\/p><\/blockquote>\n

Otherwise the main developments for BT over the past quarter are as follows:<\/p>\n

Financial Highlights – BT’s Quarterly Change<\/strong><\/span>
\n* BT Group revenue = \u00a35,632m (down from \u00a35,779m)
\n* BT Group profit after tax = \u00a3208m (down from \u00a3458m)
\n* BT Group total net debt = \u00a317,969m (from \u00a318,234m)<\/p><\/blockquote>\n

The KPIs for BT’s results also noted that the gross BDUK grant funding deferral (clawback) included in capacity\/network was: 2014\/15: \u00a329m; 2015\/16: \u00a3229m; 2016\/17: \u00a3188m; 2017\/18: \u00a3112m; 2018\/19: \u00a3213m; 2019\/20: \u00a317m (total = \u00a3788m). This reflects public money that can often be returned by BT and reinvested by local authorities to help boost “superfast broadband<\/em>” coverage (currently at around 97%). A good chunk of this has already been re-invested into such contracts.<\/p>\n

Sadly BT no longer provide customer figures for their own retail broadband ISP, although we note that 79.7% of their consumer broadband base now take a “superfast broadband<\/em>” service (up from 77.1% last quarter – mostly FTTC<\/a>) and this drops to just 2.4% (up from 2.1%) for their “ultrafast broadband<\/em>” (FTTP\/G.fast<\/a>) products.<\/p>\n

Openreach’s Network
\n<\/strong><\/span><\/h3>\n

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<\/a>, TalkTalk<\/a>, Zen Internet<\/a>, Vodafone<\/a> etc.).<\/p>\n

Otherwise the rollout of full fibre lines remains the dominant one among the two “ultrafast<\/em>” technologies, with FTTP adding 419,000 premises (up from +346,000 last quarter) and hybrid fibre G.fast<\/a> adding just 89,000 premises (down from 308,000 last quarter).<\/p>\n

The commercial G.fast<\/a> roll-out has now largely ground to a halt following Openreach’s recent review (here<\/a>), which means their future focus is now almost entirely on full fibre lines. Openreach were due to formally announce the outcome of that review last month but the COVID-19 has caused an on-going delay, but today’s data confirms that not much has changed in the past quarter.<\/p>\n

\"openreach_q4_2019-20_network_coverage_and_takeup\"<\/p>\n

The results also confirm that take-up of FTTP is now 20.35% (down from 21.57% last quarter), while G.fast stands at just 2.84% (up from 2.5% last quarter). However such figures don’t tell the whole story since, until now, both technologies have been ramping up their roll-out, which means adoption is likely to trail a bit (i.e. it’s also dynamically impacted by lots of factors like consumer choice, awareness and deployment pace).<\/p>\n

One aspect of G.fast’s deployment pace slowing to a crawl is that its take-up % will actually increase going forward, while FTTP is likely to go down as Openreach ramps up the rollout. The best way to examine take-up without all of these caveats would be to only examine areas that have been live for 12 and 24 months, but unfortunately that sort of data isn’t provided above.<\/p>\n

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