Yahoo Finance FTSE 100: BT set to hike broadband prices after returning to growth
BT Group (BT-A.L) is set to push ahead with its 13% hike of broadband price next spring, as the cost of living crisis continues to squeeze both businesses and consumers.
It came as boss Philip Jansen said inflation-linked price rises would “absolutely” go ahead in April, citing the “very, very challenging” economic environment and rising costs, the Telegraph reported.
The rise will add around £53 per year to the cost of a typical BT Fibre Essential package — its cheapest standard broadband and phone tariff which costs £33.99 per month.
The price increases apply across the company’s broadband, EE mobile and BT Sport packages.
Jansen told the paper he was hopeful inflation “would be on the low side”.
Read more: UK inflation hits 9.4% as prices rise at fastest rate for 40 years
It came as sales at BT rose for the first time in five years after the company increased its prices and saw an influx of customers signing up for full-fibre broadband.
The telecommunications firm posted a 1% rise in revenue in the first quarter to £5.1bn ($6.2bn), its first rise since 2017, while profits were up 2% to £1.9bn. This was in line with market expectations.
The company, which is gearing up for a walkout of 40,000 workers on Friday in a row over pay, said it remained confident about its outlook, keeping full-year 2023 guidance for revenue and earnings unchanged.
It added that it had contingency plans in place for the two-day strike to minimise disruption and keep customers connected.
Normalised free cash flow fell by £162m during the period due to increased cash capital expenditure.
Shares in London fell more than 5% on Thursday.
Philip Jansen, chief executive of BT, said the company was performing well operationally despite ongoing challenges in its enterprise business, and that the fibre rollout and customer connections were "both ahead of our own expectations".
"We are delivering and, notwithstanding the current economic uncertainty, we remain confident in our outlook for this financial year," he said.
He added: “BT Group has made a good start to the year; we’re accelerating our network investments and performing well operationally. Despite ongoing challenges in our enterprise businesses, we returned to revenue and EBITDA growth in the quarter.
“We continued to grow the number of BT and EE customers connected to our next generation networks. We’re building our full fibre broadband network faster than ever and we’re seeing record customer connections — both ahead of our own expectations.”
Read more: FTSE 100: British Gas owner hands billions to shareholders as customers face £3,500 bills
Openreach’s full fibre network now reaches more than 8 million homes and businesses across the UK. BT expects to increase the annual build from 2.6 million premises last year to around 3.5 million this year.
Albie Amankona, analyst at global primary research firm Third Bridge, said: “All eyes are on the BT strike tomorrow as inflation sparks a nationwide wave of industrial action for higher pay. Our experts say that inflating labour costs may force BT Group to slow down their full fibre network build.”
“Our experts say it is likely BT Group will achieve its goal of £2.5bn cost savings by 2025 despite inflation and a potential recession in the UK. Compared with their European peers, BT Group still have a higher cost per connection.”
Meanwhile, Victoria Scholar, head of investment at Interactive Investor, said: “Shares in BT have been mostly stuck in a range lately with 200p the next major resistance hurdle with a break above potentially paving the way for a bullish breakout while the next support level to watch on the downside is at 150p.”
