BT reports better than expected third quarter earnings
The UK's biggest broadband operator, BT, surprised the markets on Thursday by reporting better than expected earnings for the third quarter.
Revenue of £5.98 billion, was down 1 percent, and core earnings of £1.88 billion, down 3 percent, for the quarter to the end of December, but this was better than analysts’ expectations of £5.93 billion and £1.82 billion, respectively.
The company said that revenue and earnings grew strongly in its consumer business, helped by a September price increase and higher handset costs. however, these gains were offset by a decline in its enterprise business and in its Openreach networks arm, which BT said was hit by regulated price cuts.
BT CEO, Gavin Patterson, said he remained confident that the firm’s full year earnings would come in at the top end of earlier guidance of between £7.3bn to £7.4bn. However, he also sounded a note of caution over the impact of regulation and competition in the market.
“We continue to expect regulation, competition, cost inflation and legacy product declines to impact in the short term before being more than offset by improved trading and cost transformation by our 2020/21 financial year,” he said.
Investors, though, were unimpressed, with the shares were trading 4.23 per cent lower midmorning at £2.24. But perhaps some of the drag was due to the fact the company’s CEO is leaving.
Today’s earnings were the last to be issued under the leadership of Patterson, who is stepping down as CEO on Friday after six years in the job.
“I am handing over the business with good momentum behind its ongoing transformation programme and wish my colleagues all the best for the future.”
Philip Jansen, who is currently CEO of UK digital payments giant Worldpay, is due to take over the top role at BT from Patterson.