Total revenue for the quarter also came in lower, down 1.5% to £5.97bn.
Despite this, chief executive Gavin Patterson said the third quarter results were “broadly in line with our expectations”, adding that “we remain confident in our outlook for the full year”.
The group’s underperforming shares fell further on the back of the update and were down 5.3% at 243p at the time of writing. The telecom giant’s shares are still trading some 21% lower than where they were 12 months ago.
Ian Forrest, investment research analyst at The Share Centre, said that the continued weakness in share price “is a reflection of the fact that while some parts of the consumer-facing businesses seeing good growth, such as EE, the company is clearly under pressure on a number of fronts”.
“We see the shares as no better than a ‘hold’,” he added.
Commenting on Friday’s results, Laith Khalaf, senior analyst at Hargreaves Lansdown, declared: “It’s not a pretty picture at BT at the moment.” However, he noted that in the immediate future, “BT’s prospects will be heavily influenced by three things – pensions, broadband pricing, and football”.
BT’s pension deficit has weighed heavily on the firm for some time, currently standing at a daunting £14bn. The telecoms firm is still in discussions with its trustees over how much it needs to pay into the scheme and “low interest rates will help to inflate BT’s obligations,” Khalaf pointed out.
“However rising costs may be mitigated by scaling back benefits for members, or by pledging certain assets to the pension scheme in exchange for smaller contributions,” he added.
The telecom firm’s future also hinges on Ofcom’s review on wholesale broadband pricing and whether or not it can secure the Premier League TV rights amidst increased competition from bidders like Amazon and Facebook.
“The fear is that Amazon and Facebook may throw their hats in the ring this time around, inflating the cost of rights beyond the £5bn Sky and BT forked out last time,” said Khalaf. “A bigger spend wouldn’t be good for shareholders, or customers for that matter, though the footballers will be chuckling all the way to the bank.”
