BT: Solid quarter, all eyes on the price increase ahead
BT had a solid Q3, with some mixed results but key metrics all improving, and a (perhaps unsurprisingly) slow post-lockdown recovery the only negative.
The price increase in April should drive dramatic (for BT) revenue and EBITDA acceleration at Consumer, Openreach and BT as a whole, and easily cover pressures within BT’s own cost base.
Longer-term growth is dependent on FTTP performance, which continues to look promising with improving metrics across the board in the quarter, and no news is good news in terms of ISPs signing with competitor networks.
Related reports
BT: The vultures circle
9 December 2021BT is in rude financial health, with strong short- and longer-term prospects arising from inflation-linked price rises next year and the FTTP investment J-curve in the years ahead.
BT’s traditional investors are however understandably sceptical, leading to interest from non-traditional investors and in alternative structures.
Changing the ownership and/or structure of BT involves significant operational, financial, political and pension fund-related issues, making a change of ownership in whole or part no easy panacea.
Net neutrality in the UK: Networks versus content?
6 January 2022The UK net neutrality rules are up for review; as usual, the operators are pressuring for relaxation, and there are strong arguments that the competitiveness of UK telecoms markets make such rules innovation-quashing with no consumer benefit.
The chances of mainstream video content providers producing a windfall for telcos are slim, but there are a host of more intensely commercial content providers which have far greater potential to pay extra money for higher quality content delivery.
Future services such as virtual and augmented reality will stretch even FTTP/5G networks; allowing the telcos to develop custom business models to facilitate their delivery may well speed up the development and implementation of the metaverse in the UK.
BT: Resilient, with improving prospects
9 November 2021BT had a resilient Q2, beating consensus expectations with revenue growth improving and EBITDA only just declining despite a very tough comparable, and it reiterated its guidance for the full year.
Solid operation trends, strong cost control and inflation-linked price increases leave the company (and ourselves) extremely confident in prospects for next year.
Full fibre roll-out is also going well, with reduced costs and Sky/TalkTalk signing up to a pricing offer which will lead to accelerated adoption from next quarter, and an increasing unlikelihood of them signing up with others.
Press reports that Sky is in advanced talks to co-invest in Virgin Media O2’s upgrade of its cable network to full fibre are something of a surprise, with a host of issues for both parties to carefully consider
The muted deal would be somewhat negative for BT (although limited by Sky’s c.15% market share in VMO2 areas and regulatory protections/upsides). It is, however, a stark reminder of the precarious economics of alternative networks such as CityFibre
Whether this makes VMO2 more likely to extend its network further is a more critical issue, certainly for BT
Winners and losers as the UK fibres up
28 January 2020The speeds made possible by full fibre build are unnecessary for most users in the short term, giving limited commercial advantage to those that can offer them, but are likely to prove essential in the medium/long term.
The economics of full-scale, independent alternative networks look very challenging in our view – especially without the support of Sky – although there are some limited arbitrage/cherry-picking opportunities.
The Openreach full fibre model makes economic sense under Ofcom’s proposed regulatory framework, provided it retains the lion’s share of the market, although considerable risks remain.
BT: The vultures circle
9 December 2021BT is in rude financial health, with strong short- and longer-term prospects arising from inflation-linked price rises next year and the FTTP investment J-curve in the years ahead.
BT’s traditional investors are however understandably sceptical, leading to interest from non-traditional investors and in alternative structures.
Changing the ownership and/or structure of BT involves significant operational, financial, political and pension fund-related issues, making a change of ownership in whole or part no easy panacea.
Net neutrality in the UK: Networks versus content?
6 January 2022The UK net neutrality rules are up for review; as usual, the operators are pressuring for relaxation, and there are strong arguments that the competitiveness of UK telecoms markets make such rules innovation-quashing with no consumer benefit.
The chances of mainstream video content providers producing a windfall for telcos are slim, but there are a host of more intensely commercial content providers which have far greater potential to pay extra money for higher quality content delivery.
Future services such as virtual and augmented reality will stretch even FTTP/5G networks; allowing the telcos to develop custom business models to facilitate their delivery may well speed up the development and implementation of the metaverse in the UK.
BT: Resilient, with improving prospects
9 November 2021BT had a resilient Q2, beating consensus expectations with revenue growth improving and EBITDA only just declining despite a very tough comparable, and it reiterated its guidance for the full year.
Solid operation trends, strong cost control and inflation-linked price increases leave the company (and ourselves) extremely confident in prospects for next year.
Full fibre roll-out is also going well, with reduced costs and Sky/TalkTalk signing up to a pricing offer which will lead to accelerated adoption from next quarter, and an increasing unlikelihood of them signing up with others.
Press reports that Sky is in advanced talks to co-invest in Virgin Media O2’s upgrade of its cable network to full fibre are something of a surprise, with a host of issues for both parties to carefully consider
The muted deal would be somewhat negative for BT (although limited by Sky’s c.15% market share in VMO2 areas and regulatory protections/upsides). It is, however, a stark reminder of the precarious economics of alternative networks such as CityFibre
Whether this makes VMO2 more likely to extend its network further is a more critical issue, certainly for BT
Winners and losers as the UK fibres up
28 January 2020The speeds made possible by full fibre build are unnecessary for most users in the short term, giving limited commercial advantage to those that can offer them, but are likely to prove essential in the medium/long term.
The economics of full-scale, independent alternative networks look very challenging in our view – especially without the support of Sky – although there are some limited arbitrage/cherry-picking opportunities.
The Openreach full fibre model makes economic sense under Ofcom’s proposed regulatory framework, provided it retains the lion’s share of the market, although considerable risks remain.