BT Group (LON:BT.A)’s first quarter underlying revenue fell 3% to £5.1bn, reflecting declines in the Corporate and Public Sector segments in the Enterprise and Global divisions.
Q2 2021 hedge fund letters, conferences and more
Underlying cash profits (EBITDA) rose 3% to £1.9bn. All business areas saw growth except for Global. Reported profit after tax fell £446m to just £2m thanks to a one-off tax charge following the change to a new 25% corporation tax rate.
Overall, trading is in line with expectations and management is not making any changes to guidance.
The shares fell 4.8% following the news.
BT Group's Headline Profit Figure Is On The Puny Side
William Ryder, equity analyst at Hargreaves Lansdown:
"BT’s headline profit figure for the quarter, £2m, is on the puny side for a telecoms giant. Fortunately, that largely reflects a one-off tax payment, and on an underlying basis things look a little rosier. All major segments delivered cash profit (EBITDA) growth except for Global, where management attributed declines to project delays and lower equipment sales, as well as divestments and currency movements. The delays are likely to be primarily Covid-19 related, but their return is likely to depend on the economic recovery abroad. Closer to home things seem to be going better for BT, with the domestically focussed segments showing growth.
However, free cash flow was still negative as the group shelled out over £1.5bn in capital spending. A decent chunk of this went on more electromagnetic spectrum, but it highlights the massive capital requirements of telecoms groups. Ultimately, this is the problem for sector – largely homogenous products and eye watering investment. Overall, this quarter showed how hard it can be to get ahead in telecoms.”
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