BT reports 3% drop in revenue, flat EBITDA amid transformation

British Telecommunications plc (BT) reported a 3% revenue decline to £9.81 billion for the half year ended September 30, 2025, with profit before tax falling 12% to £1.19 billion due to higher depreciation, despite stable adjusted EBITDA of £4.13 billion. The company's strategic shift towards UK connectivity and digital transformation is driving increased capital expenditure for fiber deployment, with Openreach accelerating its FTTP rollout to 7.6 million connected premises, while cost transformation efforts delivered £247 million in annualized savings.

Analysis

British Telecommunications plc (BT) reported a 3% revenue decline to £9.81 billion for the half year ended September 30, 2025, with profit before tax falling 12% to £1.19 billion due to higher depreciation. Despite top-line pressure, adjusted EBITDA remained stable at £4.13 billion, supported by strong cost transformation efforts that delivered £247 million in annualized savings. This indicates a strategic focus on profitability amidst revenue shifts.

The company's strategic pivot towards UK connectivity is evident in its accelerated fiber-to-the-premises (FTTP) deployment, with Openreach passing 1.2 million premises in Q2 and the connected base surpassing 7.6 million. Capital expenditure increased 8% to £2.44 billion, reflecting this significant investment in infrastructure expansion. While UK service revenue decreased 1% due to legacy declines, fiber growth partially offset these pressures.

Segmental performance showed declines in Consumer (-3%), Business (-2%), and International (-9%) revenues, while Openreach revenue remained flat at £3.13 billion. The IAS 19 pension deficit decreased to £3.9 billion, improving a key balance sheet metric. The overall mixed sentiment (-0.1) reflects the trade-off between current revenue contraction and long-term infrastructure investment.

Key Decisions for Investors

• Investors should monitor the pace of FTTP deployment and its conversion into subscriber growth, as this is key to future revenue stabilization and growth.
• Evaluate the effectiveness of the £3 billion cost transformation program in offsetting continued revenue declines across legacy segments and its impact on future profitability.
• Assess the long-term implications of increased capital expenditure on free cash flow and dividend sustainability, considering the stable adjusted EBITDA but declining profit before tax.