Shares in BT Group (LSE: BT.A) (NYSE: BT.US) briefly spiked before sinking down by 3.5% in early trade, following the release of the telecommunications company’s second quarter and half-time results.
While the interim dividend was raised by a healthy 15% to 3.9p following a 15% rise in earnings per share on an adjusted basis in the second quarter, the group saw a revenue decline of 2% for both Q2 and H1, to £4.38bn and £8.73bn respectively.
Pre-tax profit in the second quarter lifted by 13% on both an adjusted and reported basis, but free cash flow fell by £77m to £533m against Q2 2013, reflecting the costs that the company’s new strategy to enter the pay-tv market is incurring.
Still, today’s results came in slightly ahead of market expectations, while BT’s previous guidance remains unchanged. Chief executive Graham Patterson also commented:
“This was a solid quarter…Â Our Consumer business continues to perform well thanks to the impact of BT Sport where Premier League audiences are up around 45 per cent on average. Â
“Fibre is also driving growth with one in three of our retail broadband customers enjoying super-fast speeds… Our fibre footprint has increased to more than 21 million premises and will continue to grow. We continue to see strong demand across the market for the faster speeds that fibre offers.”
This morning’s dip in share price looks to be part profit-taking, part a reflection that the market would like to see growth in fibre broadband increase following price cuts from competitors. It’s all well and good wanting to offer multi-channel services, with the company developing mobile phones to complement its existing mobile phone service, but if BT wants to be top then it needs to maintain its lead at grassroots level.
