BT Group PLC (LON:BT.A) has reported a decline in sales and profits for the first quarter, which it blamed on the effects of the coronavirus (COVID-19) pandemic on televised sport and reduced corporate customer activity. 

The former telecoms monopoly saw its revenues come in at £5.3bn for the three months to June 30, 2020, down 7% on a year earlier, despite a surge in customers signing up for high-speed fibre broadband.

READ: BT cancels dividend for two years to fund investment and coronavirus consequences

Although June saw an increase to around 10,000 customers per week signing up to the fastest broadband available, consumer fixed-line average revenue per customer (ARPC) was down 4% over the quarter, which the company said was due to market competition and a decline in BT Sport, while mobile ARPC was down 5% due to a decline in roaming and the continued trend towards SIM-only.

Reported profit before tax fell 13% to £561mln due to higher interest payments, higher depreciation and amortisation charges, which were only partly offset by the gain on disposal of its Spanish business.

A positive for the company was that customer churn in both mobile and fixed was down to 1% in the quarter due to low market activity during lockdown.

BT chief executive Philip Jansen felt it was a resilient performance that was delivered as the company rolled out 5G mobile masts to 100 towns and cities, and passed the milestone of 3mln fibre-to-the-premises broadband connections as part of its target to reach 4.5mln by next March and 20mln overall.

“Although uncertainties remain, we are now able to provide an outlook for this financial year,” he said, expecting adjusted revenue expected to fall 5-6%, underlying profit to fall 5-9% and normalised free cash flow to fall 25-40%,” Jansen said in the quarterly results statement.

He added: “Despite our strong operational performance in the first three months of the year, it is clear that Covid-19 will continue to impact our business as the full economic consequences unfold. Beyond this year and based on current expectations, we expect to return the business to sustainable adjusted EBITDA growth, driven in part by the recovery from Covid-19.”

On the long-rumbling Huawei saga, where the government has demanded telecoms companies remove the Chinese tech giant’s equipment from the network in coming years, Jansen and his team think they can absorb the extra costs within the £500mln already budgeted.

BT shares slid 7% to 100.35p by late on Friday afternoon.

“BT’s core service is essential for almost all of us, but that hasn’t stopped COVID-19 hurting,” said William Ryder, analyst at Hargreaves Lansdown.

“The sporting drought during lockdown reduced BT Sport revenue and some business activity was scaled back. The Champions League will kick off again soon, albeit on a reduced schedule, and next season’s football will be as popular as ever, so we’re not too worried on that front long term.”

However, he noted that BT was worried about some of its business customers and so has set up a new support scheme: “While households aren’t likely to stop using a basic utility like the internet during a recession, business customers can go bust. BT is concerned by the possibility of widespread small business insolvencies, and so are we. BT is doing the right thing by setting up support schemes that may help delay payments, but it can’t delay the pain forever if we suffer a prolonged recession.”

With BT making still sizeable profits during this difficult quarter, the CWU trade union called for management to stop layoffs. 

Andy Kerr, the CWU’s deputy general secretary for telecoms, said: “This crisis has shown that the BT workforce have been crucial in keeping the UK connected.

“BT are a hugely profitable company who receive enormous amounts of government funding to deliver broadband.

“It’s our members who have continued to work throughout the pandemic to deliver on this.

“Most businesses have taken a hit from the Covid-19 pandemic, and it’s clear BT will bounce back. The news of an impact on their financial revenue and profits will come with anxiety for the workforce, however, as BT are embarking on a major restructuring programme involving mass redundancies of its workforce.

“Any loss in revenue and profit should not impact on future job security and terms and conditions for dedicated frontline workers.

“The CWU believe BT should halt any redundancies and stop the race to the bottom on pay, terms and conditions for telecoms workers.”

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