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BT has warned it could lose more broadband customers than expected this year as competition hots up and consumers tighten their belts.
The telecoms group has bet on its networking division Openreach’s rollout of full-fibre broadband across the country as part of a £12bn investment.
Philip Jansen, presenting his last set of results as chief executive, said the company suffered losses to rivals who built full fibre to homes first in rural areas.
“Some of these copper lines are just not very good, they are old copper lines that do the minimal speeds, so of course we’d expect to lose lines there but we are upgrading. We haven’t got there yet though,” he said.
The company posted 129,000 net broadband customer losses this quarter, widening from a decrease of 126,000 in the previous three months.
Shares climbed 9 per cent to 120.60p by lunchtime in London, despite the broadband uncertainty.
Openreach competes with groups such as Nexfibre, a joint venture through which Virgin Media O2 operates, as well as dozens of alternative network providers — or “altnets” — to provide full fibre broadband services.
As BT upgrades its network, competition between these challenger companies has intensified.
BT said it continued to target a decline of 400,000 customers this financial year, but it warned that “softer market conditions increase the risk that losses will be above this level”.
“With the economic crisis, people are scaling back a little bit on broadband . . . they are a bit more cautious about it,” Jansen said.
He added line losses to alternative providers had not grown in this half year compared with the previous six months.
“We’ve always said it’s a bit of a race, a fibre race, and we’re going really, really far. We’ve broken the back of it,” the chief executive said. “Now the end is in sight, right? So that is going to happen less and less often.”
Openreach has laid fibre to 12mn premises, with a take-up rate of about a third. The company said building to reach an additional 6mn homes is under way. It has a total target of 25mn premises.
The telecoms group confirmed its annual outlook and it forecast a normalised free cash flow towards the top end of its guidance range of £1bn-£1.2bn.
Its adjusted earnings before interest, tax, depreciation and amortisation rose 3 per cent to £2.06bn in the three months to the end of September, compared with a pro forma basis to account for BT Sport during the same period last year.
During his tenure, Jansen, who steps aside for incoming chief executive Allison Kirkby in the new year, has presided over a number of restructurings, including an announcement in May of up to 55,000 job cuts by 2030 and the combination of its global and enterprise divisions into BT Business last year.
Last month, consumer division EE also announced it would start selling kitchen appliances from next year as it launched a brand refresh and marketing push.
BT said its cost-cutting programme had delivered £2.5bn in annualised savings and was on track to meet its £3bn target by the full-year 2025.
