Sale of networks arm would endanger broadband investment, BT says

BT has warned that its investment in the future rollout of ultrafast broadband would be in question if the company were forced to split off the division that oversees its fixed-line network.

Gavin Patterson, chief executive, said that billions of pounds of potential investment could be at risk if a once-in-a-decade look at the telecoms sector by Ofcom, the industry regulator, called for the company to spin off its Openreach division. "It would be difficult to convince the board of BT to invest," he said.

Announcing its full-year results on the day of the UK general election, Mr Patterson added that while BT would work happily with whichever party came to power the uncertainty of a minority government would "not be welcome".

But he made clear that BT would be more vocal if a Conservative government pushed through plans for a referendum on membership of the EU, saying that an exit would not be good for company or country.

BT promised sales and earnings growth in 2015 after completing a "groundbreaking year", adding new television and mobile telecoms services to its rapidly growing internet business.

The telecoms operator revealed full-year revenues that were slightly weaker than some analysts had expected, falling about 2 per cent to £17.8bn in the full year and £4.6bn last quarter. 

Growth in its rapidly expanding consumer arm failed to entirely offset declines in sales at its wholesale and global services operations.

Pre-tax profit rose 14 per cent in the full year to £2.6bn, and 13 per cent to £842m in the last quarter, while full-year earnings before interest, tax, depreciation and amortisation (ebitda) rose 3 per cent to £6.3bn.

Revenues at its closely watched consumer arm rose 3 per cent in the last quarter. Broadband and TV revenues rose 10 per cent while calls and lines revenues were broadly flat.

BT added 266,000 retail fibre broadband customers in the last quarter, its best three-month period for subscriber growth. Broadband customers have been lured to BT by the offer of free sports-TV channels dedicated to showing an expensively assembled range of games including Premier League football and rugby. 

The group is also slowly rolling out its own mobile services ahead of the £12.5bn acquisition of EE, the UK's largest wireless operator, which is expected to be completed by the end of the year. It is preparing to submit details of the takeover to the competition authorities.

BT signed up more than 50,000 mobile customers in the six weeks after re-entering the consumer mobile market in March, which Mr Patterson described as "encouraging".

The past quarter has been eventful for BT. In February, it agreed to pay almost £1bn for three seasons showing Premier League football games alongside Sky. It also signed definitive terms for the proposed acquisition of mobile operator EE from Orange and Deutsche Telekom.

Investors appear to have embraced the changes at BT, with shares trading near a 15-year high.

BT proposed a 14 per cent increase in its full-year dividend, to 12.4p. It increased its free cash flow outlook for the coming year, and said it expected growth in underlying revenues and "modest growth" in adjusted ebitda in spite of the impact of a higher pensions operating charge and costs relating to the launch of Champions League and Europa League games.

BT can start its Champions League football marketing campaign next month after the final, which analysts expect to further boost customer numbers.

John Petter, head of BT's consumer arm, said that Champions League games would be "reasonably priced" while BT broadband customers would be able to watch Premier League games for free for another season.

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