BT – poor sport continues to hurt revenues

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BT’s first half results were in line with management’s expectations. Second quarter adjusted revenue fell 7% to £5.4bn, bringing half year revenue to £10.6bn – also down 7%. The fall primarily reflects lower BT Sport revenue and reduced activity among business customers. Second quarter cash profits (adjusted EBITDA) fell 3% to £2.0bn.

After successful cost control measures and “robust” demand BT has tightened its full year guidance range for adjusted cash profits to £7.3bn to £7.5bn from £7.2bn to £7.5bn. Guidance for revenue, capex and free cash flow is unchanged.

The board intends to resume dividends next year at 7.7p per share.

The shares rose 8.8% following the news.

William Ryder, Equity Analyst at Hargreaves Lansdown said: “BT’s business customers are continuing to feel the pressure. Sports revenue is pretty unpleasant as fewer of us are in the pub with pals and roaming revenue is predictably poor. However, strong cost control and robust demand has given management the confidence to upgrade guidance. So, all things considered these are some reasonable results from BT.

“There are still challenges ahead and 5G looks like it will cost a fortune, but the internet is now an essential service. Some of us might debate shutting off the water before losing access to Netflix, Facebook and Google and even work. However, pricing is always under pressure from competitors, especially in mobile. It won’t be easy, but demand for the core product and a newly sustainable dividend give BT its attractions, even if capex remains eye watering and competition fierce.”

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