Broadband and mobile price rises help BT return to growth
By Paul Sandle
LONDON (Reuters) -Higher prices for broadband and mobile phone contracts helped BT return to sales growth in the first quarter, and the group said it would “stick to the course” of above-inflation increases next year to cover rising costs and investment in fibre.
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Britain’s biggest broadband and mobile provider, which has seen annual revenue decline for five straight years, said it remained confident it would grow the top line this year after meeting market expectations with a 1% rise in the first quarter.
Its policy is to increase the price of most consumer products by inflation plus 3.9%, resulting in a rise of 9.3% in April. Inflation in Britain, which rose to 9.4% in June, is at 40-year highs.
More than 40,000 of BT’s staff will go on strike on Friday and Monday over pay. The company awarded a 1,500 pound-a-year ($1,824) rise in April, a 5% increase on average.
Chief Executive Philip Jansen said BT’s pricing was transparent, and broadband priced at around 1 pound a day was “extremely good value”.
“We anticipate that structure is absolutely going to stay in place next year,” he told reporters. “We’re going to stick to the course on that.”
He said plans were in place to minimise disruption and keep customers connected during the two-day strike.
“I know things are tough in the current inflation environment but we are doing the best we can for all our stakeholders,” he said.
Shares in BT were trading down 6% at 20-week lows after the update. Analysts said the pressure on its enterprise business, where revenue fell 7%, was “worse than feared”.
“Enterprise is challenging,” Jansen said. “We expect it to be multiple years to get enterprise back to a strong position, and we’re working on the plan.”
BT reported core earnings up 2% at 1.9 billion pounds ($2.3 billion) on revenue of 5.1 billion pounds in the three months to end-June.
($1 = 0.8210 pounds)
(Reporting by Paul Sandle; Editing by Sachin Ravikumar, David Goodman and Jan Harvey)