Fibre demand and cost savings shore up earnings for UK's BT

By Paul Sandle

LONDON (Reuters) - BT, Britain's biggest mobile and broadband provider, said strong demand for fibre broadband and more than 900 million pounds of costs savings helped shore up its full-year earnings and boost cash flow.

The company has invested in a fibre network that now covers 18 million premises. It said on Thursday that quarterly net additions had exceeded 500,000 for the first time, with more than 6.5 million now connected.

Resilience in its Openreach networks arm offset revenue and earnings declines in its business and consumer units, which saw legacy voice services continue to wane and lower handset sales.

Chief Executive Allison Kirkby said momentum in fibre enabled BT to increase its target to reach 5 million premises this year, putting it "comfortably on track" for 25 million by end-2026, while maintaining its cash flow guidance.

"Fibre is a growth engine for BT as it is for the country, and we're uniquely positioned now to deliver at scale, with ambition and with urgency, the nationwide fibre platform that we've always been aiming for," Kirkby told reporters.

BT reported core earnings of 8.21 billion pounds ($11 billion), up 1% on the previous year but shy of analysts' expectations of 8.23 billion pounds. Revenue fell 2%.

Cash flow increased 25% to 1.60 billion pounds, and BT said it was on track for its target of 2 billion pounds in its 2027 financial year and 3 billion pounds by the end of the decade.

It forecast about 20 billion pounds of revenue and 8.2-8.3 billion pounds of core earnings this year.

Shares in BT, which have risen 27% in the last 12 months, traded down 3%.

An FT report on Saturday said BT was nearing a deal to sell its 50% stake in TNT Sports to partner Warner Bros Discovery.

Kirkby said there was nothing new to say, adding that the next call option window for the U.S. company to buy the stake was in the next calendar year.

($1 = 0.7450 pounds)

(Reporting by Paul Sandle; editing by Sarah Young and Ed Osmond)