BT Books Slight 1Q Consensus Beats, With Enterprise Segment Under Pressure — Earnings Review

By Kyle Morris

BT Group PLC reported results for its fiscal first quarter on Thursday. Here’s what we watched:
REVENUE: Revenue for the quarter was 5.13 billion pounds ($6.24 billion). The U.K. telecom company’s revenue for the period was forecast at GBP5.10 billion, according to a company-provided consensus. For the first quarter a year earlier, revenue at the FTSE 100 company was GBP5.07 billion.

ADJUSTED EBITDA: The metric came in at GBP1.90 billion. Analysts forecast adjusted earnings before interest, taxes, depreciation and amortization–which strips out exceptional and other one-off items–for the quarter of GBP1.89 billion, according to a company-provided consensus. In the first three months a year earlier, adjusted Ebitda was GBP1.87 billion.
WHAT WE WATCHED:
-GUIDANCE: The company made no changes to its fiscal 2023 outlook. It said it sees revenue growth, as well as Ebitda of at least GBP7.9 billion, around GBP4.8 billion in capital expenditure and between GBP1.3 billion and GBP1.5 billion of normalized free cash flow. BT had said earlier that it sees revenue falling by GBP500 million-GBP600 million a year relative to fiscal 2022 as a result of its sports joint venture and that it didn’t expect a material impact on its fiscal adjusted Ebitda outlook.
-ENTERPRISE PRESSURE: Revenue in the enterprise segment fell 7% on year to GBP1.2 billion and segmental adjusted Ebitda was down 27% at GBP315 million. The company faced challenging market conditions for large corporates, continuing legacy product declines and the migration of a wholesale mobile virtual network operator customer, BT said. “Enterprise’s pressure looks more severe than [the] market had anticipated, which could cap the upside for consensus. We do not expect a material change in consensus for now, but phasing of this could be adjusted,” Citi analysts said in a research note.
-SHARE REACTION: Shares in BT Group at 1154 GMT were down 8.1% at 161.90 pence. “Despite dialing up its first revenue growth in years the market effectively hung up on BT as the company faces up to industrial action on Friday and continues to confront problems in its business-to-business enterprise arm,” AJ Bell investment director Russ Mould said in a note.
Write to Kyle Morris at [email protected]