BT Group Q3 Profit Rises, Updates FY14 EBITDA View; Stock Up

(RTTNews) - Communications services provider BT Group Plc. (BT_A.L, BT) reported Friday a higher profit in its third quarter, boosted by increased revenues from global services and retail segments. Looking ahead, the company now expects fiscal 2014 EBITDA, a key earnings metric, at the upper end of its forecast range, citing good progress being made in transforming cost base.

In London, BT Group shares are currently trading at 383.90 pence, up 13 pence or 3.50 percent.

Chief Executive Gavin Patterson said, "The momentum on our cost transformation has enabled us to raise our EBITDA outlook for the year. It is important that we keep up the progress we are making across the group whilst continuing to focus on improving the service we provide to our customers."

The company's third-quarter pretax profit increased 6 percent to 617 million pounds from 583 million pounds in the prior year. Earnings per share were 6.3 pence, 11 percent higher than last year's 5.7 pence. The prior-year results have been restated.

The latest quarter results included specific charges of 105 million pounds, compared to last year's charges of 83 million pounds.

Adjusted pretax profit, which excluded items, was 722 million pounds, compared to 666 million pounds a year ago. Adjusted earnings per share were 7.3 pence, compared to 6.5 pence last year.

In the quarter, earnings before interest, tax, depreciation and amortization or EBITDA edged up 1 percent to 1.49 billion pounds, while adjusted EBITDA remained flat at 1.537 billion pounds with cost transformation offsetting the investment in BT Sport

Quarterly revenue increased 5 percent to 4.60 billion pounds from 4.38 billion pounds in the prior year. Revenue before items grew 2 percent.

Underlying revenue excluding transit increased 2.4 percent, compared with a decline of 3.2 percent in the prior year, with the benefits from strategic investments offsetting regulatory pressures.

Segment-wise, revenues before items from BT Global Services increased 3 percent year-over-year helped by the timing of contract milestones, and BT Retail revenues grew 4 percent driven primarily by Consumer and achieved further growth in Business IT services.

Meanwhile, BT Wholesale revenues were hurt by the migration of services off a previously terminated contract, although it reported another good order intake. Openreach revenues dropped 1 percent as regulatory price changes had a negative impact.

The company noted that outside the UK its businesses in the high-growth regions of the world delivered double-digit revenue growth.

In the quarter, Openreach achieved 339,000 net fibre connections, an increase of 38 percent, bringing the number of homes and businesses now connected to around 2.4 million. The company added 228,000 retail fibre broadband customers, up 14 percent, and now have around 1.9 million customers.

Looking ahead for fiscal 2014, BT Group said it now expects EBITDA before items to be at the upper end of its guidance of 6 billion - 6.1 billion pounds. The company also continues to expect an improved trend in underlying revenue excluding transit.

Capital expenditure is now projected to be below the 2013 level.