BT is bracing itself for a significant contraction in its broadband customer base, with a projected loss of approximately 800,000 lines this year. This anticipated decline comes on the heels of the company's push to accelerate adoption of its full-fibre network, which it views as crucial to its long-term financial sustainability. Notably, BT's first-quarter sales remained flat at £4.3bn, while pre-tax profit decreased by 4% to £505m.
Despite these mixed results, BT Group Chief Executive Allison Kirkby reaffirmed the company's commitment to achieving £2bn in free cash flow this year and £3bn by the end of the decade. This strategy underscores a significant pivot towards monetising years of substantial investment in its fibre infrastructure, as BT seeks to convince investors that these expenditures will yield robust cash generation.
BT's push towards full-fibre is yielding some success, with this segment now accounting for over half of its total broadband revenue for the first time. Openreach, responsible for delivering the network, added a record 574,000 new fibre customers in the quarter, bringing the total number of premises served to 9.4 million. Notably, Openreach is on track to connect 25 million premises to full fibre by close of 2026, marking a significant upgrade from its older copper network.
However, the competitive landscape remains fiercely contested. BT faces increasing pressure from alternative broadband providers, who are rapidly expanding their fibre offerings. This intense competition is a key factor contributing to the expected loss of legacy broadband lines, even as fibre uptake grows. The company's recent strategic moves, including the joint venture combining its international business with Verizon last month, indicate a sharpened focus on the lucrative UK market.
Shares in BT, a constituent of the FTSE 100 index, declined by up to 2.2% to 191p in early trading following the announcement. This market reaction highlights investor scrutiny over the company's ability to navigate the transition from its traditional copper network to a fibre-centric model while fending off competition and delivering on its financial commitments. The successful execution of its fibre rollout and customer retention strategies will be crucial for its future performance.