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BT Quarterly Earnings Beat Estimates as Cuts Offset Revenue Dip

BT Quarterly Earnings Beat Estimates as Cuts Offset Revenue Dip

BT Group Plc earnings shrank less than expected in the quarter as cost cuts helped offset a loss in revenue during the Covid-19 pandemic.

  • First-quarter earnings before interest, tax, depreciation and amortization fell 7% from a year earlier to 1.81 billion pounds ($2.4 billion), the company said in a statement on Friday. That compared to an average analyst estimate of 1.75 billion pounds, according to data compiled by the London-based company.
  • Separately, it appointed MTN Group Ltd. President Rob Shuter as head of its enterprise unit, replacing Gerry McQuade, who’s retiring from BT.

Key Insights

  • The company said it sees adjusted Ebitda for this fiscal year of 7.2 billion pounds to 7.5 billion pounds and that revenue will decline 5% to 6% compared to the previous year. BT’s adjusted Ebitda was 7.91 billion pounds last year.
  • Capital spending will rise to as much as 4.3 billion pounds from 3.96 billion pounds last year. BT will be busy this year building out fiber, 5G networks and starting to out equipment from China’s Huawei Technologies Co. in the U.K. after the government banned them.
  • Chief Executive Officer Philip Jansen is looking past coronavirus with a plan unveiled in May to build 20 million fiber optic connections across Britain and to restructure the former telephone monopoly.
    • Alongside scrapping the carrier’s dividend two months ago, Jansen revealed a five-year target to find 2 billion pounds of cost savings through IT modernization and cutting staff costs.
    • “Despite our strong operational performance in the first three months of the year, it is clear that Covid-19 will continue to impact our business as the full economic consequences unfold,” Jansen said in Friday’s statement.
  • The company’s pension deficit and a 500 million pound bill for ripping out Huawei Technologies Ltd. equipment, which has been banned in the U.K.’s 5G networks, are also a big demand on cash.

Market Context

  • BT shares have fallen 44% since the start of the year, versus a 21% fall in the FTSE 100 Index.
  • The stock has been pummeled by Covid-19, which reduced the company’s income from business clients, TV sales from sports and advertising as well as handset and roaming revenue.

Get More

  • Statement
  • NOTE, July 14: BT Says Costs Related to U.K. Huawei Decision Within Estimates
  • NOTE: Valuation for BT’s pension, the largest private plan in the U.K., began in July and aims to conclude in the first half of next year.
  • NOTE: BT’s three-month commitment to safeguard jobs during the coronavirus emergency has elapsed.

©2020 Bloomberg L.P.