{"id":27927,"date":"2021-11-04T07:50:06","date_gmt":"2021-11-04T07:50:06","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=27927"},"modified":"2021-11-04T08:00:17","modified_gmt":"2021-11-04T08:00:17","slug":"bt-groups-uk-fttp-broadband-cover-hits-5-8-million-premises","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2021\/11\/bt-groups-uk-fttp-broadband-cover-hits-5-8-million-premises.html","title":{"rendered":"BT Group’s UK FTTP Broadband Cover Hits 5.8 Million Premises"},"content":{"rendered":"

The BT<\/a> Group has published their Q2 2021\/22 results, which reports that their consumer ISP division now has a total of 945,000 broadband customers on their Fibre-to-the-Premises (FTTP<\/a>) network (up from 860K last quarter), while Openreach<\/a> has grown their UK FTTP<\/a> coverage to 5.78m premises (up from 5.16<\/span><\/span>m). Build costs have also fallen.<\/p>\n

Once again, it’s been another busy quarter for BT<\/a>, which has seen them pick Adam Crozier to replace Jan du Plessis as Chairman (here<\/a>), face more takeover speculation from Deutsche Telekom and Altice UK (here<\/a> and here<\/a>), confirm a plan to build 300 Wi-Fi Street Hub Kiosks (here<\/a>), move their Net Zero target forward to 2030 (here<\/a>), enable Wi-Fi on their new TV Box Pro device (here<\/a>) and fail to block a \u00a3600m class action claim – related to the alleged overcharging of landline-only phone customers (here<\/a>). BT<\/a> also signed a deal to harness OneWeb<\/a>’s LEO broadband satellites (here<\/a>).<\/p>\n

As for network access provider Openreach<\/a>, they’ve continued to move exchanges away from old copper-based analogue phone services and on to a new all-IP network (here<\/a>), waived some broadband installation fees for low-income homes (here<\/a>), tested a “new<\/em>” Air Wand solution to boost their FTTP<\/a> rollout (here<\/a>), suffered a string of copper cable thefts in Essex (here<\/a>) and expanded their FTTP rollout in N.Ireland (here<\/a>).<\/p>\n

On top of that Openreach<\/a> announced another large batch of new FTTP rollout locations (here<\/a>) and has begun to trial new pricing for their FTTP on Demand product (here<\/a>). Finally, they introduced a controversial new discount on FTTP rental prices (here<\/a>) – TalkTalk<\/a>, Sky Broadband<\/a> and 8 other UK ISPs have already signed-up to that.<\/p>\n

The Latest Results<\/strong><\/span><\/h3>\n

In corporate terms, the biggest development this time around has been BT’s confirmation that they have delivered on their \u00a31bn of gross annualised cost savings (job cuts etc.) – at a cost of \u00a3571m (below the \u00a3900m of costs they expected), which is some 18-months ahead of their March 2023 target.<\/p>\n

The catch now is that BT might feel encouraged to pursue further efficiency savings, which could carry with it additional job losses, and that may test their recent agreement with the CWU union (here<\/a>). But in the meantime, they’ve moved to keep shareholders happy by reinstating their dividend today.<\/p>\n

“We are therefore bringing forward our \u00a32bn gross annualised savings target to FY24 from FY25, with further savings in FY25, within the expected cost of \u00a31.3bn<\/em>,” added the operator.<\/p>\n

Financial Highlights – BT’s Quarterly Change<\/strong><\/span>
\n* BT Group revenue = \u00a35,238m (up from \u00a35,070<\/span><\/span>m)
\n* BT Group profit after tax = \u00a3429m (up from \u00a32m)
\n* BT Group total net debt = \u00a318,241m (decreased from \u00a318.566m)<\/p><\/blockquote>\n

BT doesn’t report full customer figures for their own retail broadband ISP division, but they have started doing it for their ultrafast services. BT Consumer reported that they had 945,000 FTTP customers (up from 860K last quarter) and EE<\/a>’s “5G<\/a> Ready<\/em>” base now stands at 5,279 million (up from 4.088m). Speaking of mobile, EE<\/a>’s 5G<\/a> network now spans around 40% of the UK’s population.<\/p>\n

Meanwhile, some 81.9% of BT’s fixed consumer base now take a “superfast broadband<\/em>” service (down slightly from 82% last quarter as users move to FTTP) and this drops to 7.3% (up from 6.6%) for their “ultrafast broadband<\/em>” (100Mbps+) products – includes both G.fast<\/a> and FTTP. We also noted that 21.7% of BT’s customers are also now taking both mobile and broadband (converged), which is up from 21.5%.<\/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 UK network, which covers the totals for all ISPs that take their products combined (e.g. BT, Sky Broadband<\/a>, TalkTalk<\/a>, Zen Internet<\/a>, Vodafone<\/a> etc.).<\/p>\n

NOTE:<\/strong> BT are investing \u00a315bn to help Openreach’s full fibre (FTTP) network reach 25 million UK premises by December 2026 – 6.2 million of those will be in rural or semi-rural areas. The build is expected to hit a peak of c.75,000 premises per week (currently c.47,300 per week, which is up from 43k last quarter).<\/div>\n

\"openreach_q2_2021-22_network_coverage_and_takeup\"<\/p>\n

The rollout of full fibre (FTTP) lines has clearly continued to grow and added +615,000 premises in the quarter (up from +555K last quarter). As for take-up, we normally expect the rapid deployment of new networks to suppress take-up figures, but Openreach’s FTTP continues to buck this trend. The result reveal that 1.264m FTTP connections have now been made (up from 1.086m last quarter) and that equates to a take-up of 21.87% (up from 21.03% last quarter) – this is impressive.<\/p>\n

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

“These results demonstrate an acceleration of pace in the transformation of BT. We are creating a better BT for our customers, the country and our shareholders. We\u2019re going further and faster on the UK\u2019s next generation connectivity; we\u2019re modernising BT and bringing down costs; and we\u2019re reinstating the dividend today, as planned.<\/p>\n

After a record six months, Openreach has now rolled out full fibre broadband to almost 6m premises and continues to lower its build cost. Its three largest customers are signed up to the new pricing offer as we see rapid adoption of what will be the UK\u2019s first nationwide full fibre network spanning 25m premises by 2026. Meanwhile, our 5G<\/a> network now covers over 40% of the UK’s population and we have over 5.2m 5G ready customers. Together, our networks provide our customers with an unrivalled level of connectivity.<\/p>\n

While we are serving our customers better than ever, BT is also changing rapidly internally. We have hit our \u00a31bn cost savings target 18 months early, which allows us to bring forward our FY25 target for \u00a32bn of savings to FY24. This is all part of creating a leaner BT with simplified processes and improved customer experiences.<\/p>\n

BT is on track and with results in-line with our expectations, we are today confirming our financial outlook for FY22 and FY23. Looking further out, as we pass the peak of our fibre build and move towards an all-fibre, all-IP network, we expect a reduction in capex of at least \u00a31bn and lower operating costs of \u00a3500m. From these two factors alone, by the end of the decade we expect an expansion of at least \u00a31.5bn in normalised free cash flow compared to FY22, and that’s before any benefits from increased revenue and further transformation efficiencies. Our progressive dividend policy will be underpinned by these increased cash flows as we move to sustainable growth going forward.”<\/p><\/blockquote>\n

One particularly interesting piece of information in these results is that the expected average build costs of their FTTP network have been lowered to \u00a3250 – \u00a3350 per premises passed (excludes new builds and net of subsidies), which helps to explain why they’ve been able to raise their coverage targets. The figures are down from their previous estimate of \u00a3300 to \u00a3400.<\/p>\n

In keeping with that, BT had indicated in May 2021 that they were exploring the idea of creating a joint venture<\/strong> to fund the rollout of FTTP to an additional 5 million premises, but have now decided not to proceed. “We have conducted an extensive review and held discussions with prospective investors, however with FTTP build costs coming down and take-up ahead of expectations, we have decided to retain 100% of the project for shareholders and to remain fully focused on driving build and take-up<\/em>,” said the report.<\/p>\n

In addition, we get a good idea of the impact that the Government’s new “Super Deduction<\/em>” tax break will have on their network rollouts. BT now expect around \u00a35bn of carried forward tax losses from FY23 as a greater proportion of capex qualify for the cash tax super-deduction. We also note that capital expenditure hit \u00a32,563m, up 30%, albeit primarily due to investment in spectrum (Ofcom<\/a>’s recent 5G mobile auctions).<\/p>\n