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BT Boosts UK FTTP Broadband Build: Adds 718k New Premises

2 years ago
BT, FTTP, Industry News, Useful Information

BT Group has released its Q1 FY24 trading update up to June 2023. Unlike previous updates, this one is more limited in detail, as BT has decided to adopt a different approach and will only provide shorter trading updates for Q1 and Q3, similar to other FTSE 100 companies. This means that the detailed information will be available in Q2 and Q4.

One of the notable highlights of the update is the progress of Openreach’s full-fiber (FTTP) broadband ISP network. During Q1, Openreach expanded its FTTP coverage to 718,000 UK premises, bringing the total to 11 million, up from the previous quarter’s 702,000. 

The company aims to cover 25 million UK premises by December 2026, and approximately 6.2 million of those will be in rural or semi-rural areas. To achieve this, Openreach is investing £15 billion in its infrastructure.

Openreach’s average FTTP build rate stands at 55,000 premises per week, a slight increase from the previous quarter’s 54,000. This progress comes after a slowdown last quarter due to a cost-cutting drive in their build plan. However, this update indicates that the FTTP build has stabilized and even improved slightly.

In terms of customer demand, the take-up rate of Openreach’s FTTP broadband lines has seen a positive increase. Despite the rapid expansion of the new network, the take-up rate has risen from 30.4% to 32%, showcasing the demand for the service. This is a notable achievement as the take-up rate for new networks often tends to be suppressed initially. Despite competition from other FTTP networks, Openreach has managed to attract customers effectively.

However, it’s not all positive news for Openreach’s national broadband base, which includes both copper and fiber connections. In Q1, this base declined by 126,000, attributed to the fiercely competitive market and a shift away from copper lines. 

Price hikes at various retail ISPs on Openreach’s network may have also contributed to the customer losses. The company predicts that more customers will switch to other providers in the future, expecting a fall of 400,000 in FY24.

BT Group’s Q1 FY24 Performance Summary:

  • The FTTP footprint has expanded to 11 million premises, representing 44% completion of the 25 million target. Additionally, about 6.2 million premises have an initial build underway. 718k premises passed in the quarter at an average build rate of 55k per week.
  • Customer demand for FTTP in Openreach increased, with Q1 orders up 34% year-on-year, resulting in net additions of 383,000 connections. Total FTTP connections have grown to 3.5 million.
  • Openreach’s broadband ARPU increased by 10.2% year-on-year due to price rises and higher FTTP volumes. However, their broadband base declined by 126k in Q1 due to a weak broadband market and competitor losses, along with communications providers moving away from copper lines. Openreach anticipates a further decline of around 400k in their broadband base for FY24.
  • Consumer broadband ARPU increased 5% year-on-year to £42.0, and Consumer postpaid mobile ARPU increased 9% year-on-year to £19.7. Both influenced by CPI-linked pricing, broadband and postpaid mobile churn rates remain steady at 1.1% and 1.0% respectively.
  • The Retail FTTP base grew year-on-year by 50% to 2.0 million, of which Consumer accounts for 1.9 million and Business accounts for 0.1 million.
  • The business performance shows positive momentum in SMB (Small and Medium-sized Businesses) but experiences declines in CPS (Consumer Protection Services), Global, and Wholesale sectors. These declines are attributed to higher input costs and the reduction of legacy high-margin managed contracts.
  • BT Group’s total adjusted revenue reached £5.164 billion, up 4% compared to Q1 FY23. This growth was driven by increased sales of fiber-enabled products and price increases in Openreach, higher service revenue in Consumer, and improved equipment trading in Business.

The Q1 results also highlighted that the BT Group’s total labor force is expected to shrink from 130,000 to between 75,000 and 90,000 by 2030. Many of the job cuts will likely affect engineers, who will no longer be needed once the main FTTP build is completed. 

Additionally, BT predicts that Openreach’s FTTP coverage will expand to between 25-30 million premises by 2030, with take-up rates ranging from 40-55%, while maintaining a build cost envelope of £250-£350 per premises.

Philip Jansen, the outgoing CEO of BT Group, expressed satisfaction with the strong start to the year despite the highly competitive market. He said:

“Over this year’s challenging market conditions, we’ve achieved a strong start with notable improvements in customer satisfaction and pro forma revenue growth across all our business units, resulting in a 5% increase in pro forma group EBITDA. Openreach has made substantial progress, completing 44% of its full fiber build, and the demand from customers continues to rise, reaching a total network take-up rate of 32%.

The Consumer segment is experiencing robust pro forma growth, driven by competitive pricing and higher performance connections preferred by customers. In the Business sector, our order book has grown, leading to increased revenue for the combined unit. As a group, we’re committed to driving transformation, and our strategy is clearly proving successful. BT Group is well-positioned for continued success, though there’s still much more to accomplish.”

Interestingly, the trading update appears to omit BT’s massive mobile network via EE. Only a brief mention of the 5G customer base, which now stands at 9.2 million, was included. In a separate study, BT reported that its 5G population coverage had reached 70%.

Overall, BT Group’s Q1 FY24 trading update showcases progress in expanding its full-fiber broadband network, attracting customer demand, and increasing revenue in various business segments. Despite facing challenges from competitors and market dynamics, BT remains optimistic about its future prospects.

pablo8
BT Group, BT Wholesale, Business, FTTP Broadband, Mobile Broadband, News, Openreach
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pablo8
Paul is a professional in his field when it comes to data connectivity writing. A Director from East Yorkshire (England), he also founded 2Connect in 2008 and enjoys analysing the latest comms and internet developments.

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