Britain’s BT goes it alone in fibre race with faster, cheaper build
BT (BT.L) heralded its progress in building Britain’s biggest fibre broadband network on Thursday, saying lower costs and strong demand would underpin returns to investors, in its latest effort to keep a circling shareholder at bay.
Chief Executive Philip Jansen said such was the momentum in its rollout, BT had decided to fund the full expansion of fibre to 25 million premises by 2026 itself after it had explored bringing in a partner for 5 million homes and businesses.
“With FTTP (fibre to the premises) build costs coming down and take-up ahead of expectations, we think the best decision for shareholders is to retain 100% of the project and its returns,” he told reporters.
The company, which is strengthening its defences against a possible takeover by European telecoms player Patrick Drahi, said it had lowered the cost of the build by 15%.
After BT passed the peak of its build, capex would reduce by at least 1 billion pounds ($1.36 billion) and operating costs by 500 million pounds, increasing free cash flow by at least 1.5 billion pounds by the end of the decade, Jansen said.
Shares in BT, which have fallen 31% since June, were trading 7% higher on Thursday, after the company confirmed its outlook for this year and next and brought forward a 2 billion pound cost savings target by a year to 2024.
Britain’s biggest broadband and mobile operator faces competition in the fibre race, with rival Virgin Media O2 planning to upgrade its entire 15.5 million premises network to by 2028. Virgin Media O2 is also talking to broadband providers about moving onto its network as wholesale customers.
Virgin Media O2, owned by Telefonica and Liberty Global, reported a 0.7% rise in adjusted revenue for its third quarter, during which it added 38,000 fixed line customers.
Jansen said BT had signed up 10 providers, including TalkTalk and Sky, to its long-term FTTP pricing offer.
“We will offer keen pricing and compete hard on customer service to fill the platform and ensure the best return on our full fibre investments,” he said.
Investors are now awaiting any move by Drahi after he bought a 12.1% stake in BT in June. A pledge not to launch a takeover expires next month.
BT has appointed boutique advisory firm Robey Warshaw to help its defence against a takeover, while it said on Monday it had delivered its 1 billion pound cost saving target 18 months ahead of schedule.
Jansen said he had good interactions with all shareholders.
“We’re not in the game of speculating,” he said. “We’re just driving on with our agenda, which we know our shareholders really support.”
BT reported a 3% decline in revenue to 10.3 billion pounds ($14.07 billion) for the six months to end-September, in line with expectations, driven by drops in services to multinational companies and a flat performance in consumer.
Adjusted core earnings rose 1% to 3.75 billion pounds.