The British telecoms company, BT, has assured its investors that it'll hit its full-year profits target after reporting third quarter earnings in line with analysts' expectations.
Adjusted core earnings for the third quarter came in a £2 billion, a rise of 2 per cent, while revenue was £5.2 billion.
Meanwhile, BT said revenue for the first nine months of the fiscal year was 1 per cent lower at £15.6 billion.
Inflation-linked price rises made at the start of its financial year supported revenue, the company said, although the disposal of BT Sport resulted in a decline in its biggest consumer unit in the three months to the end of December.
BT Sport was bought by Warner's Discovery unit back in September last year.
“Despite extraordinary energy costs and other inflationary headwinds, we are reaffirming our outlook for the year,” said chief executive, Philip Jansen.
BT, which is Britain's biggest broadband and mobile operator, said demand for faster connections was strong, with a record 155,000 customers signing up to its full-fibre products in the quarter.
“Cost cuts remain the aim of the game as BT battles with higher costs from a host of angles. There’s no avoiding the fact cash flow is under pressure,” said Matt Britzman, equity analyst at Hargreaves Lansdown.
“The rapid roll out of fibre and 5G doesn’t come cheap, but it’s ultimately a necessary evil that should pay dividends down the road.”
“Strength from the consumer division should be a driver of growth, the update of fibre is progressing well, and inflation-linked price hikes should help limit some of the impact from inflated costs,” he added.
Falling shares
After four years with Mr Jansen at the helm of BT, the company shares have lost almost half their value as he has confronted energy inflation, strikes, an increasingly gloomy economic outlook and a ban on key supplier Huawei Technologies.
It was turbulent 2022 for BT. In April, it announced a major shake-up, which moved all of its consumer units moved under the EE brand, with BT itself becoming the flagship brand for its enterprise units.
Another restructuring plan that combines BT's enterprise units with those of its global arm was set out in December, with the aim of making £100 million in cost savings by 2025.
Last year BT pushed its overall cost cutting target for 2025 from £2.5 billion to £3 billion.
Over the past year, BT shares have fallen 37 per cent, compared with a 2.4 per cent rise in the FTSE 100 index of blue chip UK shares.
BT shares slipped 2.5 per cent in early trade in London on Thursday, but later recovered.
Nonetheless, many analysts now rate the shares as a “buy” and BT's largest shareholder, the French billionaire Patrick Drahi’s Altice Group, which owns 18 per cent of the company, believes BT is undervalued, a financial adviser to the group said this week.
