BT lifts profit as cost cuts kick in and fiber signups climb

Results and market reaction

BT posted adjusted Ebitda - profit before interest, tax, depreciation and amortization - of £2.08 billion for the quarter to September, ahead of the £2.04 billion analysts expected in a Bloomberg survey. Adjusted revenue increased by 2% to £4.43 billion, matching estimates.

By 8:21 a.m. in London, the shares had risen 6.2% to 246 pence, putting them 34% higher year to date. "The heavy investment phase is clearly bearing fruit," said Adam Vettese, Market Analyst at eToro, adding BT's fiber shift should deliver "higher average revenues and should, over time, ease the pressure from the long-running decline in traditional voice line."

Strategy, cost cuts and deals

Allison Kirkby, the Chief Executive Officer since 2024, is tackling customer decline and costs after a resource-heavy fiber rollout to extend high-speed service to more homes and rural areas. BT has reduced headcount and reported first-half annualized savings of £312 million under her streamlining plan.

In June, BT struck a deal to place its global unit in a joint venture with Verizon Communications Inc., targeting completion in the latter half of the fiscal year. Last month, BT agreed to acquire TalkTalk out of administration, the UK's fourth-biggest broadband provider. The company has not included TalkTalk in its outlook while it awaits regulatory approval.

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It has said the purchase would lower fiscal-year cash by about £400 million, with the period ending in March. Kirkby has contended that the deal safeguards service continuity for 2.5 million TalkTalk customers and that it is in the public interest, even as regulators assess what it implies for the UK's biggest broadband provider expanding its market share.

Customers, competition and what it means for your portfolio

Openreach's fiber-to-the-premises lines added more than 1.1 million net customers in the first half, while older broadband services lost 366,000. BT expects total broadband subscribers to fall by about 800,000 this fiscal year.

Competition is intensifying as budget virtual carriers, satellite entrants including SpaceX's Starlink, plus retailers like Tesco Mobile and Schwarz Group's Lidl broaden mobile calling and data offers. Incumbents are leaning on bundles across mobile, broadband and entertainment to lift loyalty and margins. As Kirkby put it, "There are three competing networks in about 30% of the country now and two competing network around in 70% of the country as well, so clearly it is a very competitive market." She expects a regulatory decision on TalkTalk "fairly soon." The bottom line: cost cuts and fiber growth pushed profit above forecasts, shares rallied, and the next swing factor is regulatory clarity on TalkTalk plus execution on the Verizon joint venture - key checkpoints for how quickly the current momentum can feed through to your portfolio.

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