BT holds firm on outlook as broadband line losses deepen

BT Group reported first-half results broadly in line with expectations, with adjusted EBITDA remaining flat at £4.1 billion despite a 3% revenue decline to £9.8 billion, as increased fibre take-up helped offset competitive pressures and legacy declines. However, the company experienced an acceleration in broadband line losses, reaching 242,000 in the September quarter. Despite these challenges, BT reiterated its full-year guidance for adjusted revenue around £20 billion and EBITDA between £8.2-£8.3 billion, while also increasing its interim dividend by 2% to 2.45 pence per share, signaling confidence in its financial outlook and future cash flow targets.

Analysis

BT Group reported first-half results largely in line with expectations, with adjusted EBITDA remaining flat at £4.1 billion despite a 3% year-over-year revenue decline to £9.8 billion. This stability was primarily driven by increased fibre take-up offsetting competitive pressures and legacy business declines, alongside £247 million in cost savings. Second-quarter EBITDA of £2.08 billion marginally surpassed analyst forecasts of £2.04 billion, while Q2 revenue of £4.93 billion was slightly below the £4.97 billion estimate.

Openreach demonstrated strong fibre demand, adding 1.1 million net connections in the half, bringing total connected premises to over 7.6 million. However, the company experienced an acceleration in broadband line losses, reaching 242,000 in the September quarter, following 208,000 and 243,000 in preceding quarters, indicating persistent competitive pressure. CEO Allison Kirkby highlighted the focus on UK operations and simplification efforts as key to mitigating these declines and higher labor costs.

Despite operational headwinds, BT reiterated its full-year guidance for adjusted revenue of approximately £20 billion and EBITDA between £8.2 billion and £8.3 billion. The company also reaffirmed its cash flow inflection targets of approximately £2.0 billion in FY27 and £3.0 billion by the end of the decade. Furthermore, BT signaled confidence by increasing its interim dividend by 2% to 2.45 pence per share.

Key Decisions for Investors

• Investors should monitor the trend of accelerating broadband line losses, as sustained declines could pressure future revenue growth despite fibre expansion.
• The reiterated full-year guidance and increased interim dividend signal management's confidence in achieving financial targets and returning capital, which may support current valuations.
• Evaluate the effectiveness of BT's "radical simplification and modernisation" plans and cost savings in offsetting competitive pressures and legacy business erosion over the coming quarters.