Familiar themes emerged from BT's Q3 FY22 (the quarter ended December 31), not least continuing top-line travails at its enterprise and global divisions.

For the full fiscal year, BT is now guiding a 2% dip compared with FY21. The previous turnover outlook for FY22 was "broadly flat." BT pinned much of the blame on the "ongoing impact of COVID-19 and supply chain issues."

Thanks in part to what BT called "tight cost management" and higher revenue from Ethernet and fiber-enabled products, FY22 outlook on adjusted EBITDA – at £7.5 billion–£7.7 billion ($10.2 billion–$10.5 billion) – was maintained.

Figure 1: Light the way: Ethernet and fiber saved BT from missing targets – but the outlook for the new year is bleak.
(Source: BT)

For the nine months to December 2021, BT posted an adjusted EBITDA of £5.7 billion ($7.7 billion), up 2% year-on-year.

New Discovery

Grabbing many of the Q3 FY22 headlines, however, was BT's announcement that it had entered "exclusive discussions" with Discovery to create a 50:50 joint venture comprising BT Sport and Eurosport UK.

BT framed it as a win-win prospect in a separate announcement to its latest trading update. It said the new combined business would "remain committed" to retaining BT Sport's existing major sports broadcast rights, and that BT Sport customers would get access to Discovery's sport and entertainment content.

Marc Allera, CEO at BT Consumer, talked about creating "an exciting new sports broadcasting entity for the UK" and a "perfect home" for BT Sport. BT shareholders on the other hand will no doubt cheer any easing of the financial burden from sports rights, which includes English Premier League soccer.

BT CEO Philip Jansen, as reported by Reuters, said the previously mooted DAZN option was a good one, but the Discovery JV trumped it. "From a corporate financial point of view, the profile much improves, because obviously there will be synergies, both in cost and revenue," he said.

"And it keeps us very much in the competitive framework for what is a very interesting, exciting content market."

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CC Insight analyst Kester Mann is not convinced that BT is fully committed to the sports content game, however.

"BT's move into sports broadcasting has always divided opinion amid the high spend needed to acquire football rights," he said.

"As the operator ups its focus on networks and connectivity, particularly its growing ambition in full-fiber, an eventual sale of any joint venture with Discovery could be the likely end-game for the operator."

Any more Q3 numbers?

Group turnover, at £5.4 billion ($7.3 billion), was 2% down year-on-year. Enterprise revenue fell 6% over the same period to £1.3 billion ($1.8 billion), while sales for BT's global division dropped 4% to £871 million ($1.2 billion).

Infrastructure arm Openreach partially offset declines elsewhere, posting a 4% increase in revenue to £1.4 billion ($1.9 billion). The Openreach FTTP footprint reached 6.5 million premises as of December 31. BT aims to reach 25 million premises with fiber by December 2026.

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— Ken Wieland, contributing editor, special to Light Reading