BT to splash £550m integrating EE. Firm shrugs: Cheap!
'Lower than planned' says BT amid 'more synergies' hint
BT's £12.5bn gobble of EE will cost the business £550m in integration costs - according to the company's full-year financial results which were given a significant boost thanks to the acquisition.
For its full-year results for 2016, revenue increased six per cent to £18.9bn, with profits up 15 per cent to £3bn. Revenue for the quarter was up 22 per cent to £5.6bn, with profits up 6 per cent to £893m.
Previously the biz had reported fairly lacklustre performance.
The results are the first financials to be published after regulators waved through the EE deal in January.
Gavin Patterson, chief exec, said the integration of EE will provide “more synergies” than originally expected. The firm also said the integration costs of EE were "lower than planned".
Patterson said the results were "the best performance for more than seven years".
He said: “This has been a landmark year for BT. We’ve completed our acquisition of EE, the UK’s best 4G mobile network provider, we’ve passed more than 25m premises with fibre and we’ve also delivered a strong financial performance."
He said Openreach has hired 900 engineers to tackle missed appointments. "We’ve also recruited more than 900 extra contact centre staff. This will enable us to return EE and BT Consumer contact centre work to the UK."
Openreach and EE are to invest £6bn in capital expenditure over the next three years in the first phase of a plan to extend superfast broadband and 4G coverage beyond 95 per cent of the country by 2020, said BT.
The business will also spend £300m in 2016/17 and around £100m in 2017/18 relating to the Emergency Services Network contract won by EE in December 2015.
Revenue for other areas of the business remained flat. BT Global Services fell by 4 per cent to £6.5bn, while BT Consumer rose 7 per cent to £4.6bn. Openreach grew by 2 per cent to £5.1bn, while BT Business remained flat at £3.1bn and Wholesale fell 3 per cent to £2bn.
BT is trying to avoid a situation where Ofcom goes to Europe to force greater operational separation of BT and Opeanreach after it found the broadband division acts primarily in the interests of BT. Structural separation from BT is still being considered as a potential last resort.
In its results BT said it has made proposals to Ofcom for a voluntary agreement that would address Ofcom’s concerns and could be implemented quickly, "avoiding a prolonged period of uncertainty for the industry." These proposals are centred around a new governance structure for Openreach.
The business also revealed a pension deficit of £5.2bn net of tax. ®