BT profits soar thanks to inflation-linked contracts

The telecoms giant said pre-tax profit was £1.1 billion in the six months to the end of September, up 29% on the year before.

BT’s shares rose after the telecoms giant reported increased profits as it passed on high inflation costs to customers and a three-year cost-cutting programme paid dividends (BT/PA) (PA Media)

Telecoms giant BT has said its profits rose by close to a third as it passed on high inflation costs to customers and a three-year cost-cutting programme paid dividends.

The company said pre-tax profit was £1.1 billion in the six months to the end of September, up 29% on the year before.

It put the rise down to increased revenue, which had been helped by its inflation-linked contracts with customers, and controlling costs, among other things.

Shares rose around 6% shortly after markets opened on Thursday.

The company said it connected a record 860,000 premises to the UK’s full-fibre broadband network during the six months.

It added that average revenue per Openreach broadband user rose 10% due to price rises and more connections.

The business said it has managed to cut annual costs by £2.5 billion since April 2020, against its target of £3 billion by 2025. It has cost it £1.3 billion to do so.

Outgoing chief executive Philip Jansen said: “These results show that BT Group is delivering and on target. We’re rapidly building and connecting customers to our next-generation networks, we’re simplifying our products and services, and we’re now seeing predictable and consistent revenue growth.

“Openreach has now built full fibre broadband to more than a third of the UK’s homes and businesses with a growing connection rate.”

Mr Jansen is set to hand over to Allison Kirkby, a Briton who currently heads Swedish telecoms giant Telia.

He added: “BT Group has a bright future and I’m pleased to be handing the baton to Allison Kirkby early in the new year.

“She knows the sector, she knows the company and she’s the right person to lead BT Group from this position of operational strength.”

This was a decent set of results with cash flow now expected at the top of its guided range as some cost pressures ease on the fibre buildout side. Given the pressure shares have been under of late, investors should be relatively happy

Matt Britzman, Hargreaves Lansdown

Matt Britzman, equity analyst at Hargreaves Lansdown, said BT has been helped by the launch of “new EE”, a rebrand of some of the company’s consumer-facing products.

“There’s value in the facelift, mainly due to increased cross-selling and bundling within the consumer division,” he said.

“The timing helps too, just as BT is pushing higher prices through to consumers. The good news from today’s results is the number of customers jumping ship in search of better deals remains relatively low.”

He added: “All in, this was a decent set of results with cash flow now expected at the top of its guided range as some cost pressures ease on the fibre buildout side.

“Given the pressure shares have been under of late, investors should be relatively happy with this print.”