BT Group H1 FY26 results: Fibre acceleration, mobile gains, and cost transformation steady the ship

Is BT Group’s strategy working in 2025 as it doubles down on full fibre and UK-focused operations?

BT Group plc (LSE: BT.A) released its half-year results for the six months ending 30 September 2025, reaffirming its long-term strategy of infrastructure-led growth and transformation in the face of legacy business headwinds. While total revenue fell by 3 percent to £9.81 billion and reported profit before tax declined by 11 percent to £862 million, BT Group declared a 2 percent increase in its interim dividend and reaffirmed full-year guidance.

Chief Executive Allison Kirkby described the period as one of disciplined execution, marked by record full fibre network builds, growing 5G coverage, and continuing customer gains in broadband, mobile, and TV services. Openreach now reaches over 20.3 million premises with its FTTP (fibre-to-the-premises) network, including 5.5 million rural homes and businesses, with a target of 25 million by December 2026. At the same time, BT Group has completed its planned international divestitures to sharpen its focus on UK infrastructure and digital services.

Despite margin pressures from higher labour costs and legacy revenue attrition, adjusted EBITDA held steady year-on-year at £4.13 billion, supported by a cumulative £1.2 billion in cost savings since the launch of BT Group’s £3 billion transformation programme.

How did BT Group’s key financial metrics perform across revenue, profit, and free cash flow?

BT Group’s reported revenue fell from £10.12 billion in H1 FY25 to £9.81 billion in H1 FY26, primarily reflecting a decline in legacy voice revenues, softening handset trading volumes in the Consumer unit, and weaker performance across the International business. Adjusted UK service revenue decreased by 1 percent to £7.73 billion, driven by pricing pressures in Consumer and Business, though partially mitigated by a stronger FTTP mix and CPI-linked increases through Openreach.

Profit before tax declined 11 percent year-on-year, weighed down by higher depreciation and amortisation linked to an expanding asset base and increased finance costs in the higher interest rate environment. Profit after tax was £651 million, compared to £755 million in the previous year, while adjusted basic earnings per share fell from 10.7 pence to 9.3 pence.

Capital expenditure increased 8 percent to £2.44 billion, largely due to the scale-up of fibre builds and provisioning. Net cash inflow from operating activities declined 8 percent to £2.77 billion. Normalised free cash flow dropped significantly by 43 percent year-on-year to £408 million, reflecting elevated capex, the absence of a prior year tax refund, and lower net flows from working capital programs.

How is Openreach’s FTTP expansion and customer take-up shaping BT Group’s future?

The Openreach unit continued to anchor BT Group’s future-facing transformation. The full fibre footprint expanded by 2.2 million premises during H1 FY26, bringing total coverage to 20.3 million, with an increasing focus on rural rollouts. Openreach also added 1.1 million new connections during the period, boosting its connected premises count to 7.6 million and pushing take-up to 38 percent.

This accelerated penetration helped raise Openreach’s broadband average revenue per user (ARPU) by 4 percent year-on-year to £16.70. The gains are attributed to CPI-linked price increases, an improving speed mix, and strong demand for FTTP plans.

Retail adoption also tracked upward, with BT Group’s Consumer unit adding 476,000 FTTP customers, bringing the total to 3.7 million. The Business unit added another 44,000 fibre customers to reach 300,000. With both divisions contributing to demand momentum, BT Group appears well-positioned to reach its mid-decade targets of 6.5 to 8.5 million retail fibre connections and a 55 percent Openreach take-up rate.

What is driving customer growth and convergence in broadband, mobile, and TV segments?

BT Group’s Consumer unit showed customer growth across broadband, postpaid mobile, and TV for a third consecutive quarter, despite pressure on ARPUs. Broadband ARPU declined 1.4 percent to £41.90, while postpaid mobile ARPU fell 1.6 percent to £19.30. Nevertheless, customer convergence improved with 25.9 percent of users now subscribed to both fixed and mobile services, up from 23.1 percent in the same period last year.

Postpaid mobile subscriptions grew to 13.9 million, an 11 percent year-on-year increase. EE’s network, owned by BT Group, continued its dominance as the UK’s top mobile network for the twelfth consecutive year, as certified by RootMetrics. The 5G+ standalone network coverage now reaches 66 percent of the UK population, with a goal of 99 percent by the end of fiscal 2030.

A notable development was BT Group’s agreement with Starlink, aimed at improving broadband coverage in hard-to-reach areas. This satellite partnership aligns with the Group’s ambition to serve all UK geographies with high-speed digital infrastructure.

What transformation gains and divestitures have restructured BT Group’s operational footprint?

The half-year period saw BT Group complete or agree upon all its major international exits, including the sale of BT Radianz, BT Italia, its Irish domestic operations, and its Irish datacentre business. These divestitures simplify BT Group’s global operations and reinforce its UK-centric strategy.

The transformation programme continues to outperform expectations. BT Group achieved £247 million in gross annualised cost savings during H1 FY26, bringing the total to £1.2 billion since inception. These savings were delivered with £134 million in restructuring costs, in line with prior projections. Labour resources were reduced by 6 percent to 111,000 employees, and energy usage in networks dropped by 5 percent. Openreach repair volumes were also down by 13 percent, reflecting improved network performance.

Customer experience metrics also showed material improvement, with Group Net Promoter Score rising 5.2 points to 30.5 year-on-year, indicating better service perception and digital engagement.

How are institutional investors responding to BT Group’s earnings and mid-term guidance?

Institutional sentiment around BT Group remains mixed but gradually stabilising. On one hand, flat EBITDA, margin compression, and a 43 percent drop in free cash flow might raise short-term concerns, especially amid rising interest obligations and a pension deficit of £3.9 billion. On the other hand, the increased interim dividend, reaffirmation of financial guidance, and visible operational momentum in fibre and mobile are signals of confidence that BT Group’s medium-term model is on track.

Adjusted EBITDA for FY26 is still expected to land between £8.2 billion and £8.3 billion, with adjusted UK service revenue guidance between £15.3 billion and £15.6 billion. Normalised free cash flow for FY26 is forecast at £1.5 billion, before climbing to £2.0 billion in FY27 and £3.0 billion by the end of the decade. Institutional investors appear to be weighing these forward-looking metrics against short-term volatility.

BT Group’s share performance has tracked broader UK telecoms sentiment, with muted gains as investors look for more proof of earnings scalability from the fibre network and margin expansion post-capex peak.

What does BT Group’s reaffirmed outlook suggest about earnings stability and capital deployment?

BT Group reiterated all elements of its FY26 and mid-term guidance. From FY27 onward, it expects to deliver consistent revenue and EBITDA growth as legacy headwinds diminish. The company expects EBITDA to grow faster than revenue, helped by cost efficiencies and operating leverage from fibre and mobile convergence.

Capital expenditure is projected to decline by over £1 billion from FY26 levels as the bulk of fibre network investments taper. At the same time, BT Group expects to achieve £2.0 billion in free cash flow by FY27 and £3.0 billion by the end of FY30, implying a future pivot to higher shareholder returns or reinvestment flexibility.

The interim dividend of 2.45 pence per share, which will be paid on 11 February 2026, reflects 30 percent of the FY25 full-year payout, in line with BT Group’s stated progressive dividend policy.

What are the most important takeaways from BT Group’s H1 FY26 results and strategic execution?

• BT Group reported revenue of £9.81 billion, down 3 percent year-on-year, with declines in legacy voice, handset sales, and International operations driving the drop.
• Adjusted EBITDA remained flat at £4.13 billion, as cost transformation offset margin pressures from higher National Insurance and wage costs.
• Profit before tax fell 11 percent to £862 million, and profit after tax declined to £651 million, down 14 percent from the prior year.
• Openreach’s fibre network expanded by 2.2 million premises to 20.3 million, with FTTP take-up reaching 7.6 million premises and a 38 percent market-leading adoption rate.
• Consumer and Business units together added over 500,000 retail FTTP customers, while mobile 5G connections rose to 13.9 million, up 11 percent year-on-year.
• Consumer convergence penetration increased to 25.9 percent from 23.1 percent last year, showing growing bundling of broadband and mobile services.
• Normalised free cash flow fell 43 percent to £408 million due to increased capex, lower working capital inflows, and the absence of a prior-year tax refund.
• Capital expenditure rose 8 percent to £2.44 billion, with most of the increase tied to accelerated fibre rollout and provisioning activity.
• BT Group completed key international divestments, including BT Italia, BT Radianz, and operations in Ireland, strengthening its UK-focused strategy.
• Net debt increased to £20.9 billion, primarily due to scheduled pension contributions and full-year dividend payout.
• The interim dividend was raised by 2 percent to 2.45 pence per share, consistent with the Group’s progressive dividend policy.
• Cost transformation savings of £247 million in H1 FY26 brought the cumulative total to £1.2 billion, delivering ahead of the five-year £3 billion target.
• BT Group reaffirmed FY26 guidance and expects normalised free cash flow of £2.0 billion in FY27 and £3.0 billion by the end of the decade.