BT has ditched plans to bring in an outside investor to boost its ultrafast broadband programme, as profits slipped ahead of a potential takeover bid by the French billionaire Patrick Drahi.
Philip Jansen, chief executive, said he has ruled out putting the company’s infrastructure builder Openreach into a joint venture after talks with potential investors. The former Worldpay boss also confirmed that customers face a significant rise in their bills after inflation jumped.
However, shares in BT rose over 10pc after it said 10 internet service providers – including Sky and TalkTalk – had signed wholesale contracts with its full-fibre network. Regulator Ofcom backed its Equinox pricing framework earlier this year.
BT is bracing for a takeover tilt from Mr Drahi, an aggressive cost cutter who became the company’s biggest shareholder in June. BT had been holding discussions with possible joint venture partners in a bid to cut the expense of bringing ultra-fast speeds to an extra 5m homes in the countryside.
But Mr Jansen has decided against the move because the cost of upgrading its ageing copper network to faster full-fibre has fallen, and take-up of the service has been better than expected.
Openreach’s roll-out hit record levels in the second quarter at nearly 6m premises, as the average cost of upgrading the network dropped by 15pc to between £250 and £350.
BT’s plan to upgrade 25m homes and business to full-fibre by 2026 would now be solely delivered by Openreach, he added.
Mr Jansen also said some customers would be hit with higher prices as inflation is poised to rise by 4pc next year, according to the Office for Budget Responsibility.
BT announced in March that new and renewing customers would stomach price rises of inflation plus 3.9pc.
On the fibre joint venture, Mr Jansen said: “Because of our balance sheet strength, the savings we have made over the past few years and the prospects moving forward, we can afford to do this additional 5m we announced in May to get to 25m by 2026.
“The great news is we can afford to fund it ourselves. After all the difficulty and questions [prior to getting regulator clarity from Ofcom], now we can see such a clear picture for the outlook, we believe our shareholders should maintain 100pc of the benefit.”
BT, which has been working through 13,000 job cuts, confirmed a Telegraph report that it had delivered £1bn in savings 18 months early at a lower cost of £571m compared to a previous forecast of £900m.
The improved picture prompted BT to bring forward its target of cutting £2bn of costs each year to 2024 from 2025, with capital expenditure expected to be £200m lower at £4.8bn from 2023.
Mr Drahi, the founder of the French broadband challenger Altice, owns a 12pc stake in BT. He has been barred from bidding for BT until December after saying in June that he had no intention to make an offer.
Mr Jansen said “nothing’s changed” in BT’s approach since the arrival of Mr Drahi on the shareholder register and that all big shareholders fully support BT’s strategy.
BT revenues fell 3pc to £10.3bn for the six months to September as a stronger performance from Openreach failed to offset falls across its business connectivity arm and global IT services operation.
Pre-tax profits were also down 5pc to £1bn for the period, as the telecoms operator came under pressure from higher finance costs.
After slashing shareholder payments to help bankroll BT’s full-fibre push, Mr Jansen reinstated an interim dividend of 2.31p.
BT said talks over a potential sale of sports television arm BT Sport were continuing with a small number of parties that ranged from a potential sale to a joint investment or continuing the operation with a partner.
DAZN, the streaming service backed by billionaire Sir Leonard Blavatnik’s Access Industries, had been in exclusive talks to buy the channel from BT.
Overhauling BT’s TV business could prove a key focus for new chairman Adam Crozier, who joined the board on Monday.
The former boss of ITV will take over from Jan Du Plessis on December 1.
Meanwhile, Virgin Media O2 reported that revenue had increased by 0.7pc to £2.6bn in the third quarter, with profits down 0.6pc to £912.7m, as it added 42,000 broadband customers and secured an extra 108,000 mobile contracts.