BT Group has reaffirmed its full-year cash flow targets despite reporting flat revenue and a modest decline in profits during its latest quarterly update.
The FTSE 100 telecoms giant held guidance for approximately £2bn of free cash flow this year after revenue came in little changed at £4.3bn for the first quarter of the financial year.
Pre-tax profit slipped four per cent to £505m, reflecting the ongoing financial pressures the company faces as it transitions away from its ageing copper network.
Chief executive Allison Kirkby sought to reassure investors that the group’s long-running fibre investment programme is beginning to bear fruit and remains firmly on course.
Kirkby said: “We remain on track to deliver our targets, including cash flow of £2bn this year and £3bn by the end of the decade.”
A landmark was reached during the quarter when full-fibre broadband generated more than half of BT’s total broadband revenue for the first time in the company’s history.
The milestone was driven by Openreach, which added a record 574,000 new fibre customers during the period, taking total premises served to 9.4 million across the UK.
BT remains on course to extend its full-fibre network to 25 million premises by the end of the year, a target that underpins much of its longer-term cash generation strategy.
Despite this progress, the group continues to face mounting pressure from rival broadband providers competing aggressively for customers as the industry-wide shift to fibre accelerates.
BT still expects to lose around 800,000 broadband lines this year as alternative network operators attract customers during the transition period away from legacy copper infrastructure.
Kirkby described the quarter as “a solid start to the year”, pointing to record fibre take-up and growth in its consumer customer base as evidence the turnaround strategy is working.
The quarterly update follows BT’s deal last month to combine its international business with Verizon in a joint venture, a move designed to sharpen its focus on the UK market.
The results also come just days after an undisclosed shareholder sold a roughly one per cent stake in the group through a £167m placing, adding to near-term pressure on the stock.
BT shares fell as much as 2.2 per cent to 191p in early trading on the day of the results, reflecting cautious sentiment among investors despite the steady operational progress.