BT’s profits soar to £1.3bn following joint venture deal
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BT revenues fall on ‘difficult’ trading conditions, but profit tops £1.3bn after joint venture deal
- BT’s adjusted revenue fell to £15.6bn for the nine months ended December
- Company profit grew 49% to £1.3 billion for the last nine months of 2022
- It is launching a program to reduce costs by £3 billion by the end of 2025
BT Group’s profits have risen by almost half after selling a large stake in its pay-TV sports network.
The telecom giant reported after-tax profit growth of 49 per cent to £1.3 billion for the final nine months of 2022, even as total revenue fell 3 per cent to £15.6 billion, mainly due to weaker trading in its business and global divisions.
Declining purchases of obsolete products and the migration of a mobile virtual network operator depressed demand in the former segment, while the latter was impacted by lower orders for strategic equipment.
Revenue: BT saw profits grow 49 per cent in the last nine months of 2022 to £1.3bn
Over the same period, BT’s consumer-focused business saw flat sales as the sale of a 50 per cent stake in its pay TV sports network offset growth in mobile and fixed service sales.
BT described this as ‘strong performance in difficult market conditions’.
Nevertheless, the company’s decision to form a joint venture with Warner Bros. helped. Discovery, increase the division’s underlying profit by 15 percent, along with the rise in fiber customers.
It credits the high level of interest in next-generation products for driving a record 155,000 consumers to its high-fiber products in the last three months of 2022.
During the third quarter, the group’s digital networking arm, Openreach, also added a record 810,000 properties to its network, reaching 38 percent of its goal of reaching 25 million homes and businesses.
Openreach was the only one of BT’s four main divisions to report an increase in sales, thanks to solid demand for fiber products and Ethernet, as well as price increases.
As of the end of March, the FTSE 100 company plans to increase its monthly broadband prices by around 15 percent, reflecting the need to invest in upgrading its network and rising costs.
Much of the inflationary pressure stems from rising energy costs, which are expected to cost BT an additional £200 million this financial year.
As a result, the company is embarking on a program to reduce costs by £3bn by the end of 2025, an increase of £500m on its original target.
At least £100m in savings will come from the merger of the enterprise and global divisions into a new unit called BT Business, which the company says will bring greater supply chain efficiencies.
But shortly after announcing the proposed combination, the company agreed to a £1,500 pay rise for staff earning up to £50,000 from January, equivalent to 85 per cent of the workforce, in response to industrial action that began in the summer.
Adam Vettese, an analyst at eToro, said: ‘While this may relieve some of the burden on management, the company is also seeing its debt increase, up nearly £1.5bn year-on-year.
“In a low interest rate environment, this may not be a big deal, but rates are rising, so paying off rising debt will prove to be the most expensive for the company.”
BT’s net debt was £19.2bn in December, about £1.8bn more than last year at the same point due to pension contributions and dividend payments.
BT Group shares Closed 6.9 percent higher on Thursday at 132.4 pence, though their value is still down more than a third over the past 12 months.