BT's fiscal Q2 consumer revenues rise 7% amidst declines in wholesale, global services

BT (NYSE: BT) reported that its consumer segment was a bright spot in its second-quarter revenue mix, rising 7 percent to $1.68 billion due to higher broadband and TV revenue, helping to ease the pain of losses in wholesale and global services.  

Fiber-based broadband was a key factor in BT's consumer segment results. The consumer sector added 203,000 net retail fiber broadband customers, ending the quarter with a total of 2.5 million fiber broadband customers. The service provider said that nearly 34 percent of its retail broadband are now on a fiber-based connection.

"Our consumer business continues to perform well thanks to the impact of BT Sport where Premier League audiences are up around 45 percent on average," said Gavin Patterson, CEO of BT, in the earnings release. "Fiber is also driving growth with one in three of our retail broadband customers enjoying super-fast speeds." 

At the same time, consumer ARPU rose by 7 percent to $64 in the quarter. While BT added 88,000 retail broadband customers, it lost 85,000 consumer lines in the period. In addition, BT added 38,000 TV customers and signed a deal with Netflix to allow customers to pay for the service as part of their monthly bill.

Amidst the gains in its consumer segment, global services and wholesale suffered losses during the quarter.

Global services revenue declined 5 percent to $2.64 billion due to what it says is an impact from foreign exchange movements. A decline in public sector revenue in the UK was partially offset by higher underlying revenue in high-growth regions around the world. Likewise, BT Business revenue declined by 1 percent to $1.2 billion, an improvement on the first quarter thanks to better performance in IT services and data and networking revenue.

BT Wholesale reported that revenue dropped 15 percent to $846 million, mainly due to a 28 percent reduction in revenue from traditional calls, lines and circuits, reflecting lower fixed termination rates. The telco's managed solutions revenue also declined 16 percent due to what it says was the ongoing impact of the termination of the Post Office contract. Broadband revenue declined 20 percent due to the continued migration to local loop unbundling (LLU). Despite these losses, IP service revenue rose by 61 percent.

Over at Openreach, revenues declined 2 percent to $1.9 billion, reflecting what it says was regulatory price changes partly offset by 38 percent growth in fiber broadband revenue. Openreach has passed over 21 million premises with its fiber broadband network, and has reached 344,000 fiber broadband net connections, a 9 percent increase. It now has around 3.4 million homes and businesses connected to fiber, 16 percent of those premises passed.

"Our fiber footprint has increased to more than 21 million premises and will continue to grow," Patterson said. "We continue to see strong demand across the market for the faster speeds that fiber offers." 

From an overall financial perspective, BT reported that revenue declined 1 percent to $7.03 billion, down from $7.18 billion in the same period a year ago.

The service provider said its outlook has unchanged, adding that it expects underlying revenue excluding transit in 2014/15 to be broadly level with 2013/2014 with growth in 2015/16. It added that it expects adjusted EBITDA of $9.9 billion to $10 billion in 2014/15 with further growth in 2015/16.

Shares of BT were listed at $58.71, down 19 cents or 0.32 percent, in Friday morning trading on the New York Stock Exchange.  

For more:
- see the earnings release

Special report: Wireline telecom earnings in the third quarter of 2014

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