ii view: BT remains on track

BT has launched the UK's first 5G network, but attention remains elsewhere. 

First-quarter results to 30 June 2019

• Revenue down 1% to £5.63 billion
• Adjusted profit (EBITDA) down 1% to £1.96 billion
• Full year outlook maintained

Chief Executive Philip Jansen said:

"BT delivered results in line with our expectations for the quarter, with adjusted EBITDA declines in Consumer and Enterprise partly offset by growth in Global. We are on track to meet our outlook for the full year.

We made good progress during the quarter, including launching the UK's first 5G network, delivering an improvement to our group net promoter score for the twelfth consecutive quarter, announcing the first nine cities in our consolidated office footprint, and being named the major broadband universal service obligation provider for the UK.”

ii round-up:

The telecommunications company BT Group (LSE:BT.A) is organised into four customer-facing units: Consumer, Enterprise, Global and Openreach. 

The Consumer division services almost 30 million customers. It is the largest provider of consumer mobile and fixed broadband communications services in the UK.

Enterprise sells communications and IT services to around 1.2 million businesses and public sector organisations in the UK and Ireland.  

Global serves customers in around 180 countries, offering managed network and IT infrastructure services, while Openreach connects homes and businesses large and small. 

For the last financial year, adjusted profit growth in Consumer and Global Services was offset by declines in Enterprise and Openreach.

For a round-up of these first-quarter results, please click here.

ii view:

BT came to the UK stock market in 1984. In 1997, the new government relinquished its Special Share ("Golden Share"), retained at the time of the flotation, which had effectively given it the power to block a takeover of the company. Today, BT is the largest provider of consumer fixed-line voice and broadband services in the UK.

For investors, the company’s defensive qualities and cash generation make it appealing to income seekers. A historic dividend yield of around 8% (not guaranteed), is highly attractive in the current low interest rate environment, but dividend cover of 1.6 times earnings is down from the 3-year average of 1.8 times, adding to current investor nerves. 

Positives

• New Chief Executive may galvanise and provide renewed clarity of purpose
• Commenced the rollout of its fast 5G services
• A historic dividend yield of around 8% (not guaranteed)

Negatives

• Adjusted profit (EBITDA) fell 2% over the last financial year
• Concerns regarding a cut to the dividend payment persist
• Government pressure to speed up the roll-out of fibre broadband

The average rating of stock market analysts:

Buy