BT Group’s fibre push gathers pace as profit edges lower

BT Group has reported a solid opening quarter for its 2027 financial year, with record demand for full-fibre broadband and further progress on costs offset by weaker voice revenue and pressure on margins.

The telecoms group maintained its full-year guidance, including a target of around £2.0 billion in normalised free cash flow. That cash measure is important because it shows what remains after operating costs, capital expenditure and certain financing payments, subject to BT’s stated adjustments.

There is plenty of operational progress in the update, particularly at Openreach. However, the financial picture is steadier than the headline fibre numbers might suggest. Revenue was flat, adjusted EBITDA slipped 1%, and continuing profit before tax fell 4%.

BT Group’s first-quarter figures

The results cover the three months to 30 June 2026 and present International as a discontinued operation following the proposed joint venture with Verizon.

Continuing operations	Q1 FY27	Q1 FY26 re-presented	Change
Adjusted revenue	£4,322 million	£4,337 million	Flat
Adjusted UK service revenue	£3,843 million	£3,863 million	Down 1%
Adjusted EBITDA	£2,013 million	£2,029 million	Down 1%
Reported profit before tax	£505 million	£526 million	Down 4%

Adjusted EBITDA means earnings before interest, tax, depreciation and amortisation, excluding specific items and certain other accounting effects. It is widely used to assess underlying operating performance, although it does not capture all costs faced by shareholders.

BT said adjusted EBITDA was broadly flat when the effect of prior-year one-off items was excluded. Strong cost transformation helped, but this was countered by lower broadband and voice margins.

The decline in profit before tax was driven by higher finance costs, partly offset by lower restructuring costs. Net finance expense increased to £318 million from £294 million.

Openreach fibre demand is the standout

The clearest positive was continued progress at Openreach, BT’s independently governed network infrastructure business.

Its fibre-to-the-premises, or FTTP, network reached 23.4 million premises after another 514,000 were added during the quarter. BT remains on track to reach 25 million premises by the end of December 2026.

Customer demand also reached a record level. Openreach added 574,000 net FTTP connections, taking the total number of connected premises to 9.4 million. Its take-up rate increased to 40%.

That matters because building fibre infrastructure is only part of the investment case. BT must also persuade customers and communications providers to use the network if it is to generate attractive returns from the capital committed.

Openreach broadband average revenue per user, or ARPU, rose 7% to £17.70. Management attributed that improvement to higher FTTP take-up, customers choosing faster packages and price increases.

Openreach adjusted EBITDA increased 2% to £1,093 million, making it the only major operating division to report EBITDA growth in the quarter.

There was a less encouraging number alongside the fibre progress. Openreach broadband lines declined by 192,000, and BT continues to expect losses of around 800,000 during the full year. Fibre adoption is improving the value of the remaining base, but overall line losses remain a material challenge.

Consumer customers edge higher, but broadband ARPU falls

BT’s Consumer division recorded modest customer growth despite what the company described as a competitive market.

The customer base increased by 1,000 in broadband, 13,000 in postpaid mobile and 9,000 in television. Broadband churn was stable year-on-year at 1.1%, while postpaid mobile churn remained at 1.0%. Churn measures the proportion of customers leaving a service.

The retail FTTP base grew by 1.1 million year-on-year to 4.8 million connections. This included 4.5 million Consumer connections, equivalent to 54% of its broadband base, and 300,000 Business connections.

Consumer broadband ARPU fell 2% to £40.90, primarily because of declining voice revenue. Postpaid mobile ARPU performed better, rising 2% to £19.70.

The percentage of Consumer households taking both fixed broadband and postpaid mobile services increased to 26.8%, compared with 26.6% in the previous quarter and 25.5% a year earlier. Greater convergence can support retention and deepen customer relationships, although the quarter’s financial figures show that this has not yet translated into overall Consumer earnings growth.

Consumer adjusted revenue was broadly flat at £2,331 million, while adjusted EBITDA declined 3% to £616 million.

Business remains the main area of earnings pressure

BT said Business service revenue was stabilising, helped by growth in broadband and Corporate and Public Sector activities. New connectivity contracts were signed with Scottish Water and Royal Mail, while the company reported strong sales order growth from major customers.

Even so, the division’s adjusted EBITDA declined 7% to £302 million. Adjusted revenue was broadly flat at £1,293 million.

The company also noted that service revenue excluding voice grew during the quarter. That offers some evidence of progress beneath the decline of legacy landline services, but Business remains the weakest of BT’s three main divisions on current earnings momentum.

Cost savings are supporting the numbers

BT’s transformation programme continued to deliver efficiencies across the group.

Network energy usage declined 8% year-on-year. Total labour resources excluding International fell 8% to 94,000, while Openreach repair volumes were reduced by 21%.

These savings are helping to absorb pressure from declining voice services and broadband margins. However, cost reduction cannot carry the financial performance indefinitely. Investors will also want to see service revenue and operating profit return to sustained growth.

Customer satisfaction moved in the right direction. BT Group’s Net Promoter Score, a measure of customers’ willingness to recommend the company, rose by 3.6 points year-on-year to 30.7 after rebasing to exclude International.

Guidance is unchanged

BT reconfirmed all FY27 and multi-year financial targets for its continuing operations.

Guidance measure	FY27 outlook
Adjusted group revenue	£17.1 billion to £17.6 billion
Adjusted UK service revenue	£15.1 billion to £15.4 billion
Adjusted EBITDA	£8.1 billion to £8.2 billion
Capital expenditure excluding spectrum	£4.2 billion to £4.3 billion
Normalised free cash flow	Around £2.0 billion
Dividend growth	Low to mid-single digit

The longer-term normalised free cash flow target remains around £3.0 billion by the end of the decade. BT also expects capital expenditure to fall by more than £1 billion from the FY26 level over the medium term.

That combination of lower investment requirements and higher cash generation is central to BT’s plans for sustainable dividend growth and, eventually, enhanced shareholder distributions. Delivery remains some distance away, so progress against the fibre build, cost base and cash targets will be important.

What investors should watch next

This was a credible rather than spectacular quarter. Record fibre connections, a 40% Openreach take-up rate and rising Openreach ARPU show that BT’s network investment is gaining commercial traction.

The caution lies in the underlying financial direction. UK service revenue, adjusted EBITDA and profit before tax all declined, while Business earnings were down 7% and Openreach continued to lose broadband lines.

BT’s next scheduled update is its second-quarter and half-year results on 5 November 2026. The key tests will be whether service revenue genuinely stabilises, whether cost savings continue to offset legacy declines, and whether stronger fibre adoption begins to produce clearer group-level earnings growth.