BT lifts profit target after ‘strong’ half-year in face of pandemic

BT has improved its profit outlook for the current financial year as it hailed a “strong operating performance” despite the impact of the pandemic.

The telecoms giant increased the lower end of its earnings target for the year to £7.3 billion despite reporting a decline over the past six months.

It told investors on Thursday that adjusted earnings for the period to September 30 fell by 5% to £3.7 billion after a drop in revenue, although this was partly offset by sports rights rebates.

Revenue for the half-year tumbled by 8% to £10.6 billion, which it said was primarily caused by lower BT Sport sales and reduced business activity in its enterprise units.

BT also said it was boosted by a strong expansion of “fibre to the premises” orders through its Openreach digital network business, reporting a “strong increase” in the second quarter.

Chief executive Philip Jansen said: “BT delivered financial results in line with expectations for the first half of the year, thanks to strong operational performance during exceptional circumstances.

“Customer demand during the pandemic has shown how critical our networks have become, and our significant network investments have helped us double the number of Openreach’s FTTP (fibre to the premises) orders compared to this time last year and have seen our leading 5G network expand to 112 towns and cities across the UK.

“We continue to invest to make BT more competitive and I’m pleased to see the quality of our products and services improving.

“At the same time we are firmly on track with the delivery of our modernisation programme and have delivered £352 million in cost savings in the first half of the year.”

BT said cost savings are ahead of its plan to save £2 billion over the next five years.

The update comes a day after BT agreed a deal with Ericsson for the Swedish firm to supply equipment for its 5G network in major cities across the UK, as BT continues to shift away from Huawei.

Mr Jansen said the company saw a strong period for its mobile phone business, EE, saying that demand has only surged since the pandemic.

“Our mobile sales on EE are 10% higher for the past six weeks than prior to Covid,” he said.

“Our 5G offer is definitely a part of that as we’ve seen really strong demand for that in recent months, as people have really valued their connectivity.

“We cover about a third of population with 5G so are far ahead of any of our competitors for coverage.”

Shares in the company moved 6% higher to 107.7p in early trading on Thursday.