BT's shares at eight-year highs after record fibre take-up underpins earnings

BT Shares Reach Eight-Year Highs Driven by Record Fibre Broadband Take-Up

BT Group’s Financial Performance and Market Impact

LONDON, Nov 5 (Reuters) - Shares in Britain's BT Group hit an eight-year high on Thursday after record demand for fibre broadband helped deliver better-than-expected second-quarter results and kept it on track to generate £2 billion ($2.7 billion) of free cash flow this year.

Second-Quarter Financial Highlights

• BT reported second-quarter revenue of £4.428 billion, up 2%, and adjusted core earnings of £2.084 billion, up 3%, both slightly above expectations

• Analysts had expected second-quarter revenue of £4.314 billion and core earnings of £2.022 billion, according to a company-compiled consensus

• BT shares, already up 22% since the start of the year, rose 5% in early deals

• The broadband and mobile company said it remained on track to deliver around £2 billion in free cash flow this year and around £3 billion by the end of the decade

Openreach Network Performance

• Its Openreach network saw record demand for full-fibre broadband, with more than 10 million homes and businesses connected by last month and take-up reaching 41%

• CEO Allison Kirkby said strong demand meant BT was prioritising connecting customers, pushing its target of reaching 25 million premises with full fibre to March

• Openreach lost 175,000 broadband lines in the second quarter and expects losses of around 800,000 this year, as some customers switched to alternative fibre networks

Competitive Landscape and Strategic Moves

• Rival Virgin Media O2's decision on Tuesday to scale back its own fibre ambitions could ease competitive pressure on Openreach

• Kirkby declined to comment on Virgin Media O2's reported talks to use Openreach's network, but said: "A lot of people, now that we've built 75% of the country, would obviously be looking at buying rather than building in certain areas."

• Last month BT agreed to buy smaller rival TalkTalk after it went into administration in a deal backed by the government

• BT increased its interim dividend by 2% to 2.5 pence a share

Additional Information

($1 = 0.7413 pounds)

(Reporting by Paul Sandle; Editing by Sarah Young and Joe Bavier)