BT BT Group PLC

(Refocuses on outlook, adds CEO comment, details and share price)

--BT Group expects regulation and tough market conditions to weigh on its performance in the near term, as it warns on a potential hit from a no-deal Brexit

--The company posted lower adjusted Ebitda and revenue in the third quarter of fiscal 2019, but both exceeded analyst expectations

--Shares in BT traded 4.2% lower on the back of the news, among the top fallers in the FTSE 100

By Adria Calatayud

BT Group PLC (BT.A.LN) on Thursday posted better-than-expected adjusted earnings and revenue for the third quarter of fiscal 2019, but warned of several challenges in the near term.

Chief Executive Gavin Patterson said the company expects short-term impact from regulation, market dynamics, cost inflation and declining legacy products. However, performance should improve by the end of the year to March 2021, he added.

Mr. Patterson, on his last day as CEO before handing over to former Worldpay Inc. (WP) co-CEO Philip Jansen, said there is good momentum behind the transformation program he launched in May, which includes 13,000 job cuts.

The U.K.'s departure from the European Union continues to be another key uncertainty for the British telecommunications company. A disorderly exit could hit consumer and business confidence, although it is too early to estimate the size of any potential impact, BT said.

The company said it has contingency plans in place in case of a no-deal Brexit, including preparations to protect itself against potential import delays and to ensure it will be able to transfer customer data to and from the EU.

At 0907 GMT, shares traded 4.2% lower at 224.45 pence, among the top fallers in the FTSE 100.

Analysts at Jefferies said BT's outlook comments on uncertainties, including Brexit, suggested the company could face headwinds in the next fiscal year, despite a better-than-expected performance in the third quarter of fiscal 2019.

Adjusted earnings before interest, taxes, depreciation and amortization--BT's preferred profit measure, which strips out exceptional items--fell 3% in the quarter to Dec. 31 to 1.88 billion pounds ($2.46 billion). This was ahead of analyst forecasts of GBP1.82 billion, according to a consensus estimate compiled by BT.

Third-quarter revenue was down 1.4% at GBP5.98 billion from GBP6.07 billion in the same quarter a year before. Analysts had forecast quarterly revenue of GBP5.93 billion, according to a company-provided consensus.

For the first nine months of fiscal 2019, pretax profit rose 20% to GBP2.09 billion from GBP1.74 billion a year earlier.

BT confirmed it continues to expect adjusted Ebitda for the year ending March 31 to come in near the top of the GBP7.3 billion to GBP7.4 billion guidance range.

Write to Adria Calatayud at adria.calatayudvaello@dowjones.com

(END) Dow Jones Newswires

January 31, 2019 04:38 ET (09:38 GMT)

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