BT Boosted by Work From Home, Sheds Jobs to Cut Costs

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BT Group Plc earned more than expected in the second quarter after people working from home flocked to buy fiber broadband. It also cut thousands of jobs while reiterating the return of its dividend for investors.

  • London-based BT’s adjusted earnings before interest, tax, depreciation and amortization declined 2.9% to 1.91 billion pounds ($2.49 billion) in the second quarter from a year earlier. That beat the 1.82 billion-pound average estimate from analysts surveyed by Bloomberg.
  • Second-quarter revenue fell 7.3% to 5.36 billion pounds, compared to the average analyst estimate of 5.41 billion pounds.

Key Insights

  • The company narrowed its full-year earnings outlook to the high-end of its guidance after weekly orders for high-speed fiber nearly doubled from pre-lockdown levels to about 13,000 in September. BT also benefited from rebates on its sports rights as matches were canceled.
  • Ebitda for the year ending in March is expected to be between 7.3 billion pounds and 7.5 billion pounds. The company expects that number to rise to “at least 7.9 billion pounds” by the financial year ending in 2023, ahead of analysts’ estimates.
  • Still, BT cut 3,600 full-time roles in the first half as part of a restructuring that saved the group 352 million pounds in the period. Its workplace consolidation plan may need “slightly less office space” as it adapts to a post-Covid world, said Chief Executive Officer Philip Jansen on a call with reporters.
  • BT needs cash to reinstate its dividend, pay for a nationwide fiber optic network upgrade, and finance BT’s pension plan, the U.K.’s largest in the private sector. It’s considering alternative ways to do that, such as giving the plan “a prior claim over certain BT assets,” the company said.
  • The company plans to increase its stocks of equipment ahead of Dec. 31, when Huawei Technologies Co. 5G equipment is banned, and the U.K. will leave the European single market and customs union. The statement notes a “final purchase of necessary Huawei equipment, including spares.”
  • Britain’s former telecom monopoly bolstered its takeover defenses this summer as its market value sank to decade lows. But it hasn’t had any approaches, Jansen said on Thursday.
  • IPhone orders are “very, very strong,” Jansen said.

Market Context

  • BT shares rose as much as 9.2% to 111 pence in London on Thursday.
  • The stock had fallen 47.2% since the start of 2020 through Wednesday’s close, versus a fall of 26% in the FTSE 100.
  • Of analysts surveyed by Bloomberg: 14 rate the stock a Buy, 8 a Hold, and 1 a Sell.

Get More

  • Read the full statement here.
  • BT CEO Says Competition Law Stifles Wholesale Broadband Deals
  • Oct. 15: Ofcom Opens Probe on BT’s Compliance as Broadband Provider
  • Oct. 9: BT Shares Rise; Analysts Positive on ‘Reassuring’ Briefing
  • Sep. 29: Nokia Expands 5G Deal With U.K.’s BT to Fill Huawei Void

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