Telecoms group BT has reported a drop in its third-quarter revenues as it flagged “tough” market conditions in its consumer-facing business.
The group saw turnover fall 3% to £5.2 billion in the three months to December 31 as it took a blow from the loss of income from BT Sport, which it has offloaded into a joint venture with Disney.
Consumer revenues dropped 6% to £2.4 billion, but underlying earnings in the division lifted 7% to £669 million amid recent price rises, a surge in new fibre broadband customers and action to cut costs.
A record 155,000 customers signed up to its full-fibre broadband products in the quarter as the group said it was building the network and connecting households “like fury”.
Underlying earnings across the wider group lifted 2% to £2 billion over the quarter, it added.
BT said its consumer arm put in a “strong performance in tough market conditions”, but it was weighed down by the recent disposal of BT Sport.
With BT Sport stripped out, consumer revenues lifted 2% in the first nine months so far of BT’s financial year and group-wide sales rose by £65 million.
The figures come after BT recently warned over further job cuts and price hikes as it upped its cost-cutting target by £500 million to £3 billion by the end of 2024-25 in the face of soaring inflation and an uncertain wider economy.
It said it has cut around 6,500 roles from the group in the past two years – across its own employees and contract workers – though it has also hired staff for the roll out of its fibre infrastructure.
Chief executive Philip Jansen declined to put a figure on how many jobs would go in total by the end of 2024-25, but said “it’s true we’ll have fewer people in BT as we go forward across the board”.
It is also hiking prices, with charges for most households due to go up by 3.9% on top of inflation – nearly 15% in total – on March 31, while Openreach customers will also be affected by price hikes linked to inflation.
This morning we published our Q3 results for 2022/23 – read more on our website: https://t.co/IOGha5dxNC
— BT Group (@BTGroup) February 2, 2023
The latest figures show BT’s pre-tax profits fell 15% to £1.3 billion in the first nine months of the year, though underlying earnings edged 3% higher to £5.9 billion.
The group stuck by its full-year earnings outlook despite the pressure on pre-tax profits.
Mr Jansen said: “We’ve grown revenue and EBITDA (underlying earnings) on a pro-forma, like-for-like basis, despite a challenging economic backdrop, and we’re transforming BT Group for the benefit of our customers.”
He added: “Despite extraordinary energy costs and other inflationary headwinds, we are reaffirming our outlook for the year.”
BT revealed in November that it was facing a £200 million jump in its energy bill over the financial year.
It has also seen costs jump for equipment and wages, having settled a long-running dispute with workers over pay that saw it offer a £1,500 pay rise in December for all UK workers earning under £50,000 in a deal covering 85% of its British employees.
Combined with an increase made in April, the total pay rise for the lowest paid will be over 15% since this time last year.