BT Beats on Profit, Steps Up Cost Cuts After Drahi’s Arrival

(Bloomberg) --

BT Group Plc beat profit estimates and accelerated a cost-cutting drive, bolstering its position as it confronts a newly emboldened rival and the potential for activism from its biggest shareholder, French billionaire Patrick Drahi.

• The London-based carrier reported adjusted earnings before interest, tax, depreciation and amortization of 1.88 billion pounds ($2.6 billion) in the second quarter, versus an average estimate of 1.85 billion pounds compiled by Bloomberg. Sales were 5.24 billion pounds, in line with estimates.
• BT reiterated its outlook to 2023 and resumed paying its dividend. It said operating and capital spend will fall after that.
• BT Scraps Search to Find Partner for $16.4 Billion Fiber Project

Key Insights

• BT said Thursday it’ll save 2 billion pounds a year by 2024 and take out further costs in 2025, after revealing on Monday it had completed a billion-pound-per-year cost saving 18 months ahead of schedule.
• In the first half BT resolved its pension pact and got a decade’s assurance on regulation. But relief was short-lived for Chief Executive Officer Philip Jansen thanks to the “curveball” arrival of potential activist Drahi and the threat of newly-merged rival Virgin Media O2 poaching his biggest customers.
• Chairman Jan du Plessis will be replaced by former ITV Plc CEO Adam Crozier next month. Crozier’s official BT biography highlights the relevance of his track record in turning around “troubled organizations.”
• BT is still discussing a sale of its pay-TV Sport unit as it focuses on investing billions in broadband infrastructure instead of soccer rights, while it announced in May it could open up its Openreach infrastructure unit to external investors for the first time.

Market Context

• BT shares were up 3.7% to 147.5 pence at 08:14 a.m. in London on Thursday.
• The stock has risen about 43% in the 12 months to Wednesday, versus a 23% gain in the FTSE 100 Index.
• Of 24 analysts surveyed by Bloomberg, 13 rate the stock Buy, 7 Hold and 4 Sell

Get More

• Statement
• NOTE, Nov. 1: BT Reaches Cost Savings Goal Ahead of March 2023 Target

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