BT Group shares faced a significant drop of 6% Thursday morning after the British telecommunications leader adjusted its revenue forecast for fiscal 2025. This adjustment comes in light of a year-over-year decline in its first-half revenue and profit. The telecommunications giant now anticipates a full-year revenue contraction between 1% and 2%, a considerable downgrade from their earlier expectation of flat to a modest 1% growth in adjusted revenue.
This lowered forecast points to a poorer performance in non-UK markets, attributed to a decrease in low-margin kit sales and an increasingly challenging environment within corporate and public sectors. In terms of broader financial outlook, BT has reaffirmed several elements for fiscal 2025. The company is targeting an adjusted EBITDA of around 8.2 billion pounds, planning capital expenditures of under 4.8 billion pounds, and aiming for a normalized free cash flow of 1.5 billion pounds. For the six-month period ending on September 30, BT reported a profit of 755 million pounds, a decline from the 844 million pounds recorded in the same period the previous year.
Revenue fell to 10.12 billion pounds compared to 10.41 billion pounds, primarily due to pressures from increased specific costs and rising net finance expenses, though these impacts were somewhat mitigated by a reduction in operating costs. Dissecting BT's divisional performance reveals mixed results.
Openreach benefited notably from price increases, Ethernet base expansion, and a stronger volume mix in fiber-to-the-premises operations during the first half. Conversely, adjusted revenue within the consumer and business divisions experienced declines of 1% and 6%, settling at 4.84 billion pounds and 3.87 billion pounds respectively. In a positive development, the board has increased the interim dividend to 0.024 pound per share, up from 0.0231 pound per share a year prior.
This payment is scheduled for February 5, 2025, to shareholders on record as of December 27, 2024. "We have accelerated the modernization of BT Group in the first half of the year. We've ramped up our full fibre build and connections, seen further improvements in customer satisfaction, and our cost transformation contributed to growth in EBITDA and normalized free cash flow despite revenue declines driven by our non-UK operations and a competitive retail environment," said Chief Executive Allison Kirkby..