Key hires for telecoms group
BT bolsters top team as profit slips
BT Group has unveiled two key changes to its senior executive team as it aims to recover from recent setbacks.
The changes came as BT reported first quarter profits plummeted by 42% to £418m as a result of a £225m payment to shareholders following its Italian accounting scandal, in which earnings were overstated. There was also an increase in pension costs, business rates, sport programme rights and investment.
BT’s shares fell by 2.8% this morning as investors fretted over the rising costs and weak earnings.
Marc Allera, CEO of the mobile phones business EE acquired last year, will lead a newly-created consumer business. He replaces John Petter who leaves the company after 13 years.
The new division will operate across three distinct brands – BT, EE and Plusnet – and will span fixed and mobile networks, consumer products and services, and content.
Cathryn Ross, chief executive of Ofwat, the water sector regulator in England and Wales, joins as director of regulatory affairs. She takes over from Sean Williams, chief strategy officer who leaves BT to pursue new opportunities outside the group.
Gavin Patterson, chief executive, commenting on the results, said: “BT has delivered an encouraging performance in the first quarter of the year. We’ve made good progress in our key areas of strategic focus: deliver great customer experience, invest for growth, and transform our costs. In particular, I’d highlight the growth achieved by our consumer facing businesses, helped by mobile.
“Our new Consumer business will operate our three distinct brands; BT, EE and Plusnet; to leverage our position as the largest and only fully converged player in the market, spanning fixed and mobile networks, consumer products and services as well as content.
“We will continue to simplify and streamline the business and rationalise our costs as demonstrated by our ongoing performance transformation programme. Our businesses are leaders in their core segments and as we drive the business forward I am confident in the outlook for our company.”
Key developments for the quarter
· Consultation launched by Openreach on building the investment case for a large-scale FTTP network
· Consumer and EE divisions will be brought together to drive converged products and accelerate transformation
· Forthcoming spectrum auction will allow BT to bid for high frequency spectrum facilitating upgrades to 5G technology
· Continued improvement in customer experience metrics, Group Customer Perception and Right First Time
· BT won exclusive live rights for European elite rugby cup competitions for 2018/19 – 2021/22
· Restructuring programme on track. Plans announced to streamline Italian business
· Mobile postpaid net subscriber additions of 210,000, with churn remaining low at 1.1%
· Openreach fibre connections remain high at 437,000, with fibre broadband now passing 26.8m UK households
· Retail broadband net additions represent 53% market share, with fibre net additions of 170,000
· Consumer revenue generating units per customer increased 4% to 2.00. Monthly mobile ARPU was £20.4, up 9%
· Settlement of warranty claims with Deutsche Telekom and Orange under EE acquisition agreement, arising from the previously reported issues in Italy, with specific item charge of £225m
· Reported revenue up 1% and underlying revenue up 0.2% driven by consumer facing businesses
· Adjusted EBITDA decreased 2% due to increased pension costs, business rates, sport programme rights and investment in customer experience
· Net cash inflow from operating activities of £1,315m down £19m, and normalised free cash flow of £556m up £108m due to working capital phasing
· Outlook maintained with share buyback of £200m in the quarter