Eurobites: UK Budget will cost us £100M a year, says BT

BT has claimed that the recent UK government Budget will cost the company an extra £100 million (US$129 million) a year from April 2025 and that "cost transformation programs" – usually corporate code for job cuts – will need to be intensified to offset this. The warning came from BT's chief financial officer, Simon Lowth, as he discussed the company's H1 earnings (see below). The Budget – in which the financial policies of the government are set out for the next financial year – mandated, among other things, an additional 1.2% on employers' National Insurance contributions (National Insurance is a form of tax that goes towards workers' state pensions), lowered the national insurance threshold and increased the "living wage."

BT is lowering its full-year revenue guidance after a first six months that saw its adjusted revenue fall 3% year-over-year, to £10.1 billion ($13 billion), due, says the operator, to challenging conditions at its Business unit, principally driven by non-UK trading in its Global and Portfolio channels. The effects of continued competition in the consumer sector were broadly offset by growth at BT's network access division, Openreach, thanks to price increases, Ethernet base growth and improving FTTP volume and mix. Profit after tax was down 11%, to £755 million ($974 million). During the period, BT claims that it achieved a record fiber-to-the-premises (FTTP) build rate of 2.1 million, taking its FTTP footprint to 16 million premises, equivalent to around half of the UK. (See Eurobites: BT puts Global unit on the slab – report.)

Telefónica has finalized the details of its fiber joint venture with Vodafone Spain. The new entity, currently called FiberCo, will cover approximately 3.6 million premises and is expected to have around 1.4 million customers at its incorporation. Telefónica will hold 63% of the equity and Vodafone the remainder. The proposed deal is subject to the usual regulatory approvals, which are expected to be obtained in early 2025. It's not the first fiber JV for either company: Telefónica has already established a rural fiber-to-the-home collaboration with Vauban Infrastructure Partners and Crédit Agricole Assurances, while Vodafone Spain entered into a similar arrangement with MasOrange, the JV created earlier this year through the merger of Orange Spain and Másmóvil. (See Telefónica plots another Spanish fiber JV, this time with Vodafone.)

Telefónica has also confirmed its full-year outlook for 2024 after adjusted net income reached €1.91 billion ($2.05 billion) in the first nine months, up 16.8% on the equivalent period a year ago. However, foreign exchange mayhem, not least in Telefónica's Brazilian market, meant that revenues in the third quarter declined by 2.9% to €10.02 billion ($10.78 billion), to reach a total of €30.41 billion ($32.71 billion) in the first nine months. EBITDA (earnings before interest, tax, depreciation and amortization) also fell in the third quarter, by 2.5% to €3.26 billion ($3.50 billion). The operator returned to growth on its Spanish home turf, with EBITDA increasing by 1% in the third quarter, to €1.15 billion ($1.23 billion) and by 0.6% in the first nine months to €3.38 billion ($3.63 billion).

Group service revenue at Kenya-based Safaricom grew by 13.1% year-over-year, to 179.9 billion Kenyan shillings ($1.39 billion) in the six months ended September 30, with its domestic unit powering the strong performance. Safaricom's M-Pesa mobile money platform contributed 42.9% of service revenue.

Sweden's Ericsson has signed an agreement with Bangladeshi operator Grameenphone committing the two companies to collaboration on AI and automation through trials, workshops and pilot projects.

A new GSMA report predicts that the mobile industry's contribution to GDP in sub-Saharan Africa will reach $170 billion by 2030 – but only if "key connectivity barriers" are addressed. In 2023, that GDP contribution stood at $140 billion. Thirteen percent of the population in sub-Saharan Africa are still unreached by 4G, while a 60% "usage gap" affects those who live within coverage areas but face obstacles to getting online, such as unaffordable devices or limited digital skills.