Good day, and welcome to BT's trading statement for the third quarter, ended December 31st, 2021. My name is Sandra Patrick, and I'm your host today. During the presentation, your lines will remain on listen only. I would like to advise all parties that this conference is being recorded for replay purposes. Now I'd like to hand over to Mark Lidiard. Please go ahead. Sandra, many thanks. Welcome, everyone. My name is Mark Lidiard, from the BT Investor Relations team. Presenting on today's call is Philip Jansen, Chief Executive, and he'll be joined for Q&A by Simon Lowth, Chief Financial Officer. Before we start, I'd like to draw your attention to the usual forward-looking statements on slide two, and our latest annual report for examples of the factors that could cause actual results to differ from any forward-looking statements we may make. Both the slide and the annual report can be found on our website. With that, I'll now hand over to Philip. Thanks, Mark. Good morning, everyone, and thanks for joining today's call. As usual for our third quarter results presentation, I will make some prepared comments. As Mark said, Simon's with me, so, we can both take your questions later on. I'll briefly talk through the highlights for the quarter, our business unit results, and our progress against strategy. Starting with the highlights on slide four. Overall, the business performed well in quarter three. We saw a softer market with revenue impacted by some deferral of activity caused by COVID-19 and some supply chain issues. If you take a step back, you can see that we are firmly delivering against our strategy and accelerating the pace of execution. For example, on build, Openreach saw record FTTP build in the quarter, taking its FTTP footprint to over 6.5 million premises. On take up, Openreach FTTP net adds in the quarter were up 37% quarter-on-quarter, and are now at 20,000 a week. On customer experience, group NPS is at an all-time high, while churn and complaints continue to run at extremely low levels. On our strategic products, Consumer saw record FTTP adds in the quarter, and now has over 1 million FTTP connections and 6.4 million 5G-ready customers. We had a solid cost performance, as demonstrated by the stronger EBITDA. These examples demonstrate the positive operational and commercial momentum in the business and show that we're delivering well in the areas in our control. At this time, while we are seeing several positive lead indicators across the group, including low churn, record high group NPS, and encouraging market share signs in Enterprise and Global, we don't expect a major pickup in activity from large corporate customers until after quarter four. As a result, we are amending our full year 2022 revenue outlook from broadly flat to down circa 2%. Importantly, we are also reconfirming the remaining items of our outlook for this year with the lower revenue being offset by strong cost control. The lifting of most COVID-19 restrictions across the U.K., coupled with the accelerating pace of delivery against our strategic priorities, gives us the utmost confidence in our previously stated objectives, including consistent and predictable growth in revenue and EBITDA from fiscal year 2023. As I'm sure you all remember, I said in November that at least GBP 7.9 billion of EBITDA guidance for FY 2023 was deliverable under any imaginable scenario. With the positive underlying momentum and strong lead indicators we are seeing across the business, I reiterate that commitment today. In addition to our results this morning, I'm really pleased to make two strategically important but separate announcements in relation to content. First, we've reached a new agreement in principle with Sky on our reciprocal content sharing agreement to beyond 2030. Separately, we've announced that we're now in exclusive discussions with Discovery to create a joint venture with BT Sport and Eurosport UK. More on these later. Before outlining progress against our strategic priorities, let me quickly touch on the financial performance for Q3, starting on slide five. Revenue for the quarter was down 2% to GBP 5.4 billion, as declines primarily in Enterprise and Global were only partially offset by Openreach. EBITDA of GBP 2 billion was up 4%, driven by growth in Consumer and Openreach and strong cost control across the group. An acceleration of fibre build in Openreach and investment in our mobile network drove an increase in CapEx. Excluding Spectrum, this was GBP 1.2 billion, up 14%. Normalized Free Cash Flow was an inflow of just over GBP 500 million, an increase of 27%, driven by lower cash tax, increased EBITDA, and improved working capital movements, partially offset by the increased CapEx. Turning to slide 6 and our unit performance. Starting with Consumer, the quarter benefited from continued growth in the BT broadband base, sequential broadband ARPU improvement, and a record direct channel handset mix, but was offset by lower post-paid mobile revenue, driven by an increasing SIM-only base, coupled with reduced market activity, which led to a 1% decline in revenue. The significant increase in EBITDA was driven by lower indirect commissions, tight cost management, and a number of small one-off items. Moving to Enterprise, declines in legacy products and contracts, coupled with the ongoing migration of an MVNO customer in Wholesale, continued to impact the business. Despite the benefits of our cost transformation program, EBITDA decreased year-on-year, driven by the reduction in revenue and the timing of profit recognition in some of our larger contracts. While the 12-month rolling order book continues to be impacted by extensions in quarter four fiscal year 2020, the year-to-date order book for Enterprise is encouraging, up over 8%. We also see encouraging signs in terms of our market share, particularly in mobile. Global continues to see near record high NPS, win rates for new business and renewals, and is broadly maintaining market share. The impact of COVID-19 has meant continued reduced activity and lower project-based spend. This offset the benefit of revenue from relationship-driven lower margin equipment sales. In addition, revenue this quarter reflected the impact of prior year divestments and a negative foreign exchange movement. Excluding divestments and foreign exchange, revenue was 2%. EBITDA for the quarter reflected the lower revenue, partly offset by lower operating costs from ongoing transformation and rigorous cost control. Excluding divestments, one-offs, and foreign exchange, EBITDA was down 17%. In Openreach, revenue growth was driven by continued higher rental bases in fiber-enabled products and Ethernet. EBITDA growth reflects the increase in revenue and ongoing efficiency programs, partly offset by higher fiber provisioning costs, reflecting further positive momentum in the take-up of our market-leading networks. Costs were also impacted as we continue to invest in our people to deliver ever-improving customer service and network build. Moving on to slide seven. In May, I outlined our plans for a future that is about consistent, predictable, and sustainable growth. In November, I outlined how progress against a number of strategic priorities would underpin this growth. I now want to update you on some recent progress. Starting with FTTP, Openreach continued to build like fury and delivered another record 500,000 homes and businesses every premises, which means we're already over a quarter of the way through our 25 million premises target. 2 million premises of our existing build is in rural areas. The larger scale and broader skill set of our in-house engineers is a particular advantage given current supply chain challenges, enabling us to build at an ever increasing pace, higher quality, and lower cost than anyone else. Our costs remain in the GBP 250-GBP 350 per premises range. We continue to drive volumes off copper and onto our full fiber network using both commercial deals such as Equinox, as well as exchange and product-based stop sales. Demand for FTTP is very strong. Net adds in the quarter were up 37% quarter-over-quarter and are now at 20,000 a week. We now have over 1.5 million customers connected to our FTTP network and are driving even faster take-up of our ultra-fast speeds. With just under half of all FTTP orders now coming from external CP customers, it is clear that Openreach Equinox offer is working. We also continue to make positive progress with our mobile network. This includes renewed commitments to boost rural connectivity by upgrading 4G in more than 2,000 areas by June 2024. Our 5G rollout continues at pace, operating in more places than any other network. We were delighted to see RootMetrics recognize EE once again as having the U.K.'s best 4G and best 5G networks. Alongside investing in our next generation networks, we continue to invest to create standout customer experiences. Clearly, these are resonating well with our customers, as evidenced by the positive momentum we're seeing in our key leading indicators. We've seen consumer churn and complaint levels remaining low for both broadband and mobile. We achieved our highest ever NPS result for BT Group, supported by record NPS levels for BT and EE brands across both consumer and SME. Openreach end customer sentiment is also at an all-time high. I'm also delighted we maintained our position as a market leader in IDC's European Managed Security Vendor Assessment. As we've said many times before, we have a strong position in the fast-growing security market, and we see security as a key growth opportunity for BT going forward. This all supports the acceleration and take-up of our strategic products. Our consumer FTTP base is now over 1 million, with quarter three setting another record quarterly increase. This has driven additional volumes onto our converged product Halo, our highest NPS, highest ARPU consumer product. Our 5G-ready base continues to increase and is now over 6.4 million. For our larger multinational customers, our partnership with Rackspace Technology will transform our hybrid cloud services. Our customers will benefit from the integration of their cloud management expertise, automation, analytics, and AI tools with our world-leading network and security capabilities. We've also added next-generation conferencing capability to the existing Microsoft Operator Connect voice service. We signed contracts with BAI Communications across consumer and enterprise to support their role in delivering connectivity solutions across the London Underground. EE will be delivering 4G and 5G connectivity throughout the network, while BT Wholesale will be providing premium data center space. We also signed a major contract with DHL. In December, we launched our manifesto to accelerate responsible, inclusive, and sustainable growth over the next decade, setting the agenda for all future BT initiatives and leading the way to a brighter and more sustainable future for our customers, colleagues, and country. Finally, we continuously look to optimize the group's portfolio and capital allocation to maximize value. With this in mind, we're delighted to announce today a new agreement in principle with Sky on reciprocal content sharing. This will strengthen our strategic relationship with Sky and allows us to continue providing our customers with access to NOW and for Sky to provide their customers with access to BT Sport. Ultimately, this will lead to more choice and more flexibility for our customers. We hope to conclude these discussions by the end of next month. Separately, the joint venture with Discovery will be a great home for our sports business and further enhances our content proposition. We would remain committed to retaining our existing major sports broadcast rights, and customers would get access to Discovery content, including Eurosport UK and the discovery+ app. The joint venture agreement will be subject to regulatory approvals, and we are aiming to conclude these negotiations during Q1 fiscal year 2023. To conclude on slide eight, we saw good overall performance in quarter three despite the softer market. We're seeing really positive momentum in operational performance, with many leading indicators across the business reflecting the progress we've made in offering valued propositions to our customers. With consumer churn levels at near all-time lows, low customer service complaints, and group NPS at an all-time high. We're accelerating progress against our strategic priorities, which is strengthening and simplifying the organization. We're building a better, stronger BT for the future, founded on our leading next-generation networks, including FTTP and 5G. I'm delighted with the two separate announcements regarding content that we've made today. We are firmly on track to achieve our outlook for EBITDA and cash this year, having amended our revenue outlook to reflect the ongoing impact of COVID-19. As we gather momentum through quarter four, despite ongoing cost pressures, we remain committed to revenue and EBITDA growth next year and beyond, supported by inflation-linked pricing on around two-thirds of our revenues and our ongoing modernization agenda. On a longer-term view, we remain confident in the delivery of significant normalized free cash flow growth with an expansion of at least GBP 1.5 billion compared to fiscal year 2022 by the end of the decade, before any benefits from increased revenue and before further transformation efficiencies. Putting this all together underpins our confidence in at least GBP 7.9 billion of EBITDA next year and our commitment to our progressive dividend policy. We've got around 45 minutes for Q&A now. If you wouldn't mind, please could you limit your questions to one per person to make sure as many people can ask their questions as possible. With that, I'd please ask the operator to open up the lines. Thank you. If you wish to ask a question, please click on the Raise Hand icon next to your name. Please note that the Raise Hand icon is only displayed once you hover your mouse over your name in the participant panel. Once your question is answered or if you wish to withdraw your question, please click on the Hand icon again. In case you joined using a telephone line, please key star three. We have our first question coming from Akhil Dattani from JP Morgan. Please go ahead. Hi, morning, Philip, and thanks for taking the question. Hi, Akhil. Could I maybe start on your revenue outlook, both for this year and I guess the broader comments you've made beyond this year? I guess firstly it would just be great to understand where the deltas are that have led you to revise down the revenue guidance. Obviously, you're highlighting enterprise and COVID, but if you could maybe just flesh out what you're seeing and why you're so sure it's COVID related. Then I guess the bigger picture question, which I guess is more important, is what happens beyond here? Because implicitly, your guidance implies a flattish performance into Q4, but you're being quite explicit and you're still confident in returning to growth and sustained growth into next year. Maybe if you could just talk us through why you're confident, what the main moving parts are, and yeah, why you're so confident around that. Yeah, Akhil, look, obviously a key question. Let me try and answer it. Firstly, let's start with EBITDA. I think, this year, next year, you can hear the confidence in what we're describing on EBITDA, and that's for the reasons that we've outlined today. You can see the momentum on cost and transformation over the last couple of years. I think that's gonna continue. Also, the core fundamentals of how our customers are seeing the business, complaints, churn, NPS. That just means it's stable and therefore we're very confident delivering those numbers. Of course, you know, the revenue is more uncertain, yeah. It's less in our control in lots of ways. A gain, to answer the question the way you sort of asked it. It's all about enterprise. I mean, if you can see Openreach is already growing and it's linked into inflation and CPI, we're gonna, sure, talk about price increase at some stage in our consumer and SME business. That makes us feel good about that part of revenue. The real challenge is in enterprise and particularly large corporate. When I say enterprise, I mean global and our U.K. enterprise business. Again, is it all COVID and supply chain issues? Who knows? That's the truth of that. Because what we do know is the market is much slower. We're not losing market share. Our market share metrics, where we have them, are all where we'd like them to be. The question is will project-based work come back in the timeframe we want for large corporate customers, particularly in global, but also in enterprise, and will there be this sort of bit of rebound in that customer segment that we wanna see. We need to continue to sell the newer products that we've got and move away from the legacy in the way we've described before. Yes, it's challenging, no question within the enterprise space, but 2/3 of the revenue is index-linked, basically. I don't know Simon, do you wanna add anything to that? No. Akhil, is that okay? Yeah. It is. I guess just a very quick follow-up just to, I guess, hopefully not labor the point. Given the indexation that we're seeing, you've put through, and I guess that applies to Openreach and consumer, I guess, is it something that you can be confident enough to say that revenues will return to growth pretty early through the year as a function of that irrespective of what happens to enterprise, or is it a bit more complicated than that? Well, I think it's too early to start calling individual quarters for the reason we just talked about before, because the big swing item is the enterprise large corporate market. I mean, the rest of it, frankly, is mathematical, and which I'm sure we'll get into maybe later on, and delivery of our performance in a competitive market. I don't know how it will work out exactly, but t he prices do go up from quarter one. Fine. That's clear. Thanks a lot. Our next question is coming from Nick Delfas from Redburn Atlantic. Please go ahead. Hi, Nick. Quick question on the new sports channel. Obviously currently it's quite tightly integrated into your offers, how you sell BT Sports. As you move to a joint venture, are you gonna lose that integration? What effects do you think that might have on your customer retention within BT Broadband? Yeah. Look, nice one, Nick. Short answer is no problem at all. I mean, this. The move with Discovery is a situation where the whole venture of BT Sports combined with Eurosport is stronger by definition. Clearly, the financial move of that is attractive because there'll be synergies on the cost line, and by definition, the revenues will also be higher than they would have otherwise been. Because we're gonna be offering more choice and more flexibility to our customers. We see upside as a result of this joint venture, and no downsides. In terms of bidding for sports rights, how's that gonna be managed? Because there's obviously very big-ticket outcomes. I mean, is it gonna be separately capitalized? What kind of rules are gonna be in place between the two parties? Yeah. As you do understand, we're not gonna get drawn into the commercial details of the joint venture. All I'd say to you is, we spent almost a year negotiating what's the best route forward for our BT Sports business. We always said there were three things. We might keep it, we might sell it, we might do a joint venture. We spent an enormous amount of time considering all the options and working through the details of all the options. Let me reassure you, as we go down this particular path, we've got to sign it, obviously, we're very, very happy, as are our partners, with the nature of the commercial details within that joint venture. Okay, great. Thanks very much. Our next question is coming from Carl Murdock-Smith from Berenberg. Please go ahead. Hi, Carl. You dangled the carrot of getting mathematical, so I'll bite. I was just wondering if you can expand a bit on the inflationary pricing. You're talking about 2/3 overall. Yeah. I suppose within consumer, when you first announced the CPI plus 3.9% price increases, I think you said that you wanted about three-quarters of the base would be on that type of tariff by this March. I was just wondering if you could kind of confirm that. I suppose you've got various people on Home Essentials and BT Basic, et cetera. What proportion of the consumer division revenues overall will see the CPI plus 3.9% price increase? I suppose in Openreach, can you also just kind of confirm what percentage of revenues overall there will also see inflationary price increases as we come round into April? Thanks. Yeah. Carl, of course. If everyone wouldn't mind just indulging me for a minute. Let me talk through the rationale for the price increase so we're clear, and how you'll hear some of the way we'll articulate to our customers by definition. Then I'm gonna ask Simon to try and reconcile for all you guys. I realize this is a very important topic for all the obvious reasons, and obviously it's a positive dynamic for all of us, but it is important everyone gets it right, and there are some uncertainties by definition. If you give me two minutes to rattle through the thinking, and Simon will try and reconcile as best he possibly can, how you can think about your modeling. Is that all right? That's great. Thanks. Okay. Firstly, I think just in terms of why are we doing this? We're gonna be putting the price up, but it's contractual. All our customers know about it. They, when they sign the contract, it's completely explicit, it's completely transparent. Th at's a much better way of doing things. Nevertheless, we're in the teeth of an inflationary storm and bills are going up everywhere for everybody, and in certain places massively, particularly energy. We recognize that, and so we need to be very careful about how we explain how we do this. Let me give this to you. For example, firstly, when we look at the data usage, data increase on our broadband network up 90% since 2018, and on mobile it's 79% since 2019. You've got huge data usage on our networks increasing dramatically over just the last couple of years. Our customers are relying more than ever on that core connectivity, whether it's mobile or fixed. W hether it's working from home, online education, growth of TV, streaming, gaming, all the things you know well. We think that's a very important first point. The second point is, we're investing really heavily, right? You can hear some of that stuff in the GBP 15 billion of spending on building fiber and FTTP, the leading investment in 5G network, funding the Huawei swap out. All the things we like to do on sustainability that there are slight premiums on renewable energy, for example. We think it's the right thing to do, and our customers support us on that, but ultimately it has costs associated with it. W e're 100% renewable energy in BT. I think in terms of the... There's usage in the connectivity part, and then there's investment as well. Obviously we're suffering on our own, in our own right, getting costs up in our own business. I think what I'd just say is you can get, in terms of value for money, the average British household gets brilliant connectivity at speeds of more than 70 Mbps at GBP 1 a day. I think you just gotta stop and think about it. That is a big anchor point. 70 Mbps for just GBP 1 a day. Yes, the price is going up, but that we think is exceptional value. If you compare that to other places, the U.K. is 40% cheaper than the U.S., and around 30% cheaper than Germany and Spain. Again, just in terms of kind of other final points for you to think about. I mentioned our customer service. I'm always banging on about NPS and delivery for our customers. W e have had throughout the last two years, through difficult times, through COVID, we've delivered very, very good customer service. We're the only network to answer 100% of our customer calls in the U.K. All these things are, of course, slightly more expensive than the cost of an exercise of outsourcing. We think the service is really good as well for our customers. Final point to make is you sort of mentioned it, Carl, we are thoughtful about how we think about this price increase for everybody, and then we've got a significant chunk of customers who are either vulnerable or on low incomes, and they come under the banner of our Home Essentials package, and that Home Essentials package will not go up in price. That's sort of the rationale and the thinking why the prices will be going up by the way that I described, but I would stress to you the uncertainty is we need to maintain our business as it stands and make sure that our customers get great value for money compared to other people. That is the unknown when we looks at the delivery in April-May time. Simon, do you wanna help a little bit in terms of how we think about it from a revenue point of view for the people on the call? Yep, sure. Let's start, Carl. Hi. Let's start with consumer. We absolutely said that as we rolled customers onto the new contracts that something like 75%, Carl, of our sort of contracted connectivity customers would be on the new CPI Plus contracts as at the first of April. That remains the case. What we're also clear on is that there are some elements of our revenue that are not sort of subscription-based connectivity contracts. Good examples of that would be our wholesale sports, advertising, pubs and clubs. You also do need to strip out things like roaming, interconnect revenues, and in addition, we've made clear that we'll protect certain vulnerable customers. If you add that lot up, Carl, it's probably a good proxy and it varies, but it's probably about 20% of the revenue is not sort of within the overall scope of, you know, subscription contracts. The remainder, 75%, that will be eligible from April 1st. That's on consumer side. If we go to business side, probably a good proxy revenue. There are certain ancillary services, some of the Ethernet portfolio not on, the direct index link. The residual's probably about 80% of the overall revenue base. It's those two that get you to the sort of 2/3 of the group. Of course, there's the volume, and in the enterprise segment as well, which is about 15%, something like 15%, I think. Okay. Carl, just hope that works. Carl, just one final to finish up. Yeah. Hopefully this is for everybody. Three things. The prices are going up. Yes, it's significant, but we still think we provide good value for money. Secondly, we're gonna look after our vulnerable customers and low-income customers. There's no price increase for the people on those social tariffs. Thirdly, if the market does become irrational, we will always ensure we remain competitive and maintain our customer market share. Carl, does that help? That's brilliant. Thanks very much, both of you. Thanks, Carl. Next up, we have a written question that was submitted by Jacob [Houston] at Credit Suisse, and the question is, over what sort of timeframe do you see global and enterprise turning around, and when do you think these segments can stabilize EBITDA or return to growth? I mean, look, thanks, Jacob. Again, that's as we said or referred to earlier, that is the key unknown for us, when does the enterprise business come back to growth. Again, as we look forward, we're confident that the business will grow next year from a revenue top-line point of view. The key challenge is can we, you know, when does the enterprise growth trajectory appear. We just. It's too uncertain to call right now. Overall, we feel confident in the revenue growth. What I would say, just to put some dimension on it, the public sector is good and the SME and SoHo sector is good. We feel comfortable about that. It really is for global, the international large corporate customers and for our enterprise, it's that sort of wholesale and large corporate customers that we need to get some trajectory on. Our next question is coming from David Wright from Bank of America Merrill Lynch. Please go ahead. Questions. We've talked about the revenue inflation, I guess onto the cost inflation and you guys have these sensitive, I guess, discussions on wage rises especially after the wage freeze recently. I was just wondering if you could shed any light on this, especially compared with the kind of prices you're putting through in the retail environment, and whether there's any kind of ballpark you could give us of how we could expect wages to inflate within the 2023 EBITDA guidance. That would be very useful to get some color. Just as an addition to that, we got Vodafone yesterday commenting on the impact of energy price rises. Some telcos like Telefónica are getting hit already, some are guiding to a 12-month delay because of hedging. If you could maybe give us an indication as to what is your exposure to absolute energy spot price rises, and when we could expect that to hit the numbers, as the hedging rolls off. That would be very useful. Thank you. Sure. Thanks for those questions. I mean, Simon can do the energy answer in a minute, and let me try and handle the pay question. I completely understand where you're coming from, David. Very important topic for a whole host of reasons. A, from our people's point of view, hugely sensitive. T hey're under the same pressures I referred to earlier in terms of inflation and the squeeze on disposable income. But also for all of us and you guys as looking at our business in terms of the financial impact of a pay award when the salary bill is sort of, GBP 6 billion or circa GBP 6 billion is obviously important. Look, I get it. The short answer, I can't give you a specific answer. Of course I can't, because we haven't decided yet, and we need to think about it and discuss with our union partners and many other stakeholders. I think the way I would try and give you a little bit of color to it is, we are gonna make a pay increase, and we've announced that already. You're right to point out that we haven't had pay increases for managers for the last couple of years and last year, no one. T here is a backdrop of that environment that we need to consider. O f course, when we're still waiting for the revenue growth to come through, it's all about affordability. We are investing so heavily in the business, depressed cash flows versus previous years, and the revenue line is still not growing. It's about what can we afford. What I can say to you is we will do our very best for our people to deliver the best pay award that we possibly can, given the circumstances. Of course, we've got to be very mindful that the company is still not firing on all cylinders. As soon as it does, then we'll feel more positive about it. That's the best I can describe to you. Is that all right, David? Yeah. Super. On the energy as well, perhaps. Is that Simon? I'm gonna let Simon do the energy. Yeah. David, we've guided previously that if you look in our KPIs, the cost, you'll see property and energy about GBP 1 billion. We've said previously that something like half of that is energy. We've further said that about half of the energy is the commodity, and that we do run a rolling hedge program, which typically hedges a year ahead. We had not completed all of our hedging for FY 2023 prior to the volatility we've seen in the power markets. There will be some impact relative to FY 2022. Not material in the scheme of BT, but clearly beyond that into FY 2024, we do not hedge that far forward other than we do have some power purchase agreements which fix our price over multiple years. We will have some exposure in FY 2024 to higher energy prices, and obviously we're examining now, what options we've got to mitigate that issue for FY 2024 and beyond. Simon, if you wouldn't mind me doing the back of the envelope here. It's GBP 1 billion, 50%, GBP 500 million is energy, 50% again, GBP 250 million is commodity. On a pro forma basis, if energy prices have doubled in the wholesale markets, could that be a kind of incremental sort of, GBP 250 million we need to think about in fiscal 2024 versus, say, fiscal 2022? No, because I mean, there are two issues. One is, we have protection from our purchase agreements. We are ever improving our energy efficiency. You've taken today's spot price, which is obviously extremely volatile. No, that is not the sort of impact. I mean, it's an important cost that has to get managed tightly within the business. We do that. It is not a material item for the totality of BT. Okay, thank you. Our next question is coming from Nick Lyall from [audio distortion]. Please go ahead. Hi, Nick. Hello, Philip. It was just a quick one. Coming back to the price rises on Carl's question, please. Can I just understand the mechanics on this, given it's now contractual? I mean, what if you do start to see the NPS fall and disquiet amongst customers? I mean, how much flexibility do you actually have on adjusting pricing? Is it individual conversations with customers now, or could you come out with a sort of marketing strategy, a lower rise, and how would you approach that? And secondly, have you seen any of the competitors breaking ranks yet? It doesn't seem so, but anybody coming out with any announcements that concern you that somebody's gonna break ranks and try and sort of gain share? Thanks. Yeah, Nick. Look, good follow-up. Look, again, it's my personal view that the sort of core connectivity, pre-connectivity pricing in the U.K. is mispriced, right? If you look at broadband particularly, but also mobile, I think it is exceptionally good value for money. I gave that stat of on average 70 Mbps for less than GBP 1 a day. If you just stop and pause for a minute and think of what most of us are doing, if you've got families or living together, students, what you're actually doing on your computer, device, game machine, telephone for less than GBP 1 a day. That's my first point. It 's not surprising that the returns in our sector have been below what people would have liked. This sort of correction needs to happen. At the moment, we are seeing, from what we can gather, a more rational thought stream on investment versus returns and how pricing should be thought about across the business. That is encouraging. To answer your specific question, so far so good. To answer your specific question, who knows how the market might play out? It's very, very competitive, quite rightly. As I said, it's led to great outcomes for customers, and they continue to get those great outcomes. We need to make sure that the investments are going now pay back. Otherwise, you end up not getting the investment that you really want in the rural areas, both in mobile and in fixed. That's the core of it. H ow would we do it? It depends. At this moment in time, we have spent a lot of time and effort thinking through how we communicate with our customers and explain the rationale, which I sort of rattled through for you as to why the prices are going up and underline the sheer value for money that they're having. In all our testing and all our modeling, that conversation has gone extremely well. If, of course, the market changes and people suddenly amend their behavior, then we will respond to that to make sure our customers don't have some disparity on the value for money metric. It's that simple. I think, when we look at how things are panning out at this moment in time, I think there's an understanding that with the investment going in and the value for money equation we've currently got, prices unfortunately need to go up significantly, particularly given the other cost pressures that we're all under. Thanks, Nick. Next up, we have Polo Tang from UBS. Please go ahead. One question in terms of Sky. Well, actually one question in two parts. How confident are you that Openreach will remain the sole wholesale broadband provider to Sky longer term? And also, have the terms of your content swap agreement with Sky changed from the original agreement? Thanks. Yeah, I mean, look, That's a question you have to ask Sky. I'm very hopeful that they will stay on the Openreach platform. I mean, again, you know, but they are, as you probably know, exclusively buying FTTP from Openreach. Again, I would underline that the numbers we've articulated today, GBP 6.5 billion build, GBP 1.5 billion connected, more than half not through BT Retail on the connection. Really encouraging, and you can work out from that that the bigger CPs are really accelerating their volume, and Sky is obviously one of the very biggest. We're encouraged by that. We think we've got the pricing right on Equinox. We're always looking for opportunities to make sure we do everything we possibly can for our CPs to get what they need. That's both in quality and speed of build, but also the pricing and the overall proposition to make sure they get the right return. That is the Openreach way of doing business. I think the other thing to say on the Sky relationship is if you just step back, it's multidimensional, right? We've announced something today which is really important, and you referred to it in your question. This content sharing deal, this new 10-year partnership is very, very important to us. But we have other elements of the Sky relationship, which are I mention again on the FTTP take-up, but also, I think we've announced it previously, that we're doing co-provisioning. Sky are now doing using their people to provision FTTP. They're obviously the only people who do that on the Openreach network because they've got their own engineers. Again, the relationship with Sky is very positive. Clearly, we compete fiercely with them at the retail level, but there are many places where we have partnership elements. Again, we just continue to drive those as hard as we possibly can. They're one of our biggest, most important partners. Our next question. Can we have the next question please, Sandra? Our next question is coming from Andrew Lee from Goldman Sachs. Please go ahead. Yes. I had a question around your Openreach opportunity and basically your fiber digital infrastructure monetization. Last time we heard from you on results, we just heard about the VMO2 fiber upgrade and plans for wholesaling, and at the time you said you weren't really surprised by that. Then we had the Openreach day where you presented us some scenarios in terms of overbuild risk or wholesale market share loss. I just wonder, it's been a few months since we last spoke to you. I just wondered if you could give us an update since then from what you've learned. Do you see wholesale network competition risk has gone up or down versus what you thought or at the end of last summer? Also on that front from a consumer perspective, for higher speeds at a higher price, do you think that demand level has gone up or down? Thank you. Andrew, thanks for that. Unfortunately, we lost a bit of that question through the connection. I suppose you're not using any mobile or one of the BT landlines, but- Can't be. What's that? Can't be. Exactly. Andrew, do me a favor. Can you repeat the question, please? Sorry, the second half of it. Yeah. Yeah, apologies. The question was, we're just asking about. I was just asking about since last summer. From what you can see, has the risk of wholesale network competition gone up or down in your eyes or the degree of risk to your market share there? Same question just for consumer demand for paying higher prices for higher speeds. Has that demand level gone up? Or your understanding of the demand level going forward gone up or down since last summer? Just overall scope to monetize your network. Got it. Okay. Well, let me do the second one first. I'll give you a perspective, then Simon give us perspective on the risk of wholesale. The good news is, and I sort of referred to it earlier on, there is no question, and it is an opportunity for our sector, that all our customers, whether it's consumers, households, businesses, understand and value connectivity more than they did two years ago. That is brilliant that we are certainly more highly valued by everybody. Therefore, when it comes to the specifics of your question, are consumers and households more interested in higher speeds and therefore by definition they're spending more? The answer is yes. You can see that in the broadband ARPU, and you can see it on net adds, and you can see it on our NPS. The short answer to that question is yes, and we've got to make the most of it. Make sure that our customers get what they want, and it's delivered in a way that is exceptional service. Yes. On the risk of wholesale, I think. Look, that is clearly a mega question in terms of how will that play out over time. The way I think about it is there is only one national network, and that is Openreach. It's gonna be built 25 million homes by December 2026, and then it's gonna keep going and build that national network. Nobody else anywhere near that timeframe. I'm not complacent at all because I know my customers on Openreach have choices and have alternatives. Our job is to make sure that the alternative that they might have doesn't look any more attractive than working with us. The quicker we build, the more that we connect, the better we give them value for money at a CP level, and they can see an opportunity to make fair returns, and we're delivering fantastic products for them, the better off we're gonna be. I will give specific. I mean, Sky such an important customer. Everyone knows they've got 6 million connections into Openreach. You know, they've just launched Sky Glass and IPTV. What do you need to make that product work? You need brilliant connectivity delivered by FTTP generally. I mean, you can do it with SOGEA, of course, but FTTP is what you're gonna need. That's why we just gotta make sure we build that. The market is going to IPTV. We've got designs on that too. That's in our control. I hope, I really hope, and I believe that we will not suffer huge downgrades from overbuild and wholesaling. If other people wholesale successfully and we lose customers, we will still make a decent return on our Openreach investment. What I'm gunning for is a return at the higher level that we talked about over the last 18 months or so. That's why I think, given the pace of investment, the scale of investment, GBP 15 billion, and the nature of what we're doing, I think Openreach deserves that. Simon, do you wanna make a comment on the wholesale risk and how you think about it? No, I think you've covered it, Philip. Openreach provides a very compelling proposition for CPs and thereby, for end customers. You talked about the coverage pace build, the cost to build, et cetera. C learly we're really focused on delivering on that proposition for CPs, but we recognize that CPs have choice. Indeed, we covered this at our business briefing in Openreach. We made clear that, if a CP did elect to move volumes, firstly, that is gonna take time to do that. Secondly, there are costs associated with it. Of course, we are seeing new broadband customers coming to the market, and therefore, we describe that while our overall share of the broadband market might decline, our overall base is fairly resilient. Moreover, with the increased ARPU coming through from FTTP, we were pretty clear that under you know really most conceivable scenarios, we could see resilient revenue in Openreach driving that return that Philip described. I think that really covers it. Andrew, it does. Let me add one other thing as I think about it. Again, just to try and share with you know, the way we look at the way the market could play out, and you're onto something which is obviously, very, very important. Let's just, if you mentioned Virgin. If Virgin did build out even more than they've currently got planned, it's obviously, as Simon says, that's gonna take a long time, right? I mean, whichever way you look at it's gonna take a long time. This is a decision that would be, 10 years in the making. If they did do that, and a big customer, let's just exaggerate, Sky and TalkTalk, who are our biggest other CPs outside of BT Retail, decided to move some of their volume. They could never move all their volume because by definition, there's only one national network, which is us. If they did, then of course we'd react. Of course, we would be absolutely focused on maintaining our interest as best we possibly could, and that would depress pricing. Make no mistake. We are very happy with our current plans. We think they make total sense for the industry, for ourselves, for our stakeholders and our CPs. If you take the, call it the Armageddon scenario, where a big other builder takes a load of customers off us, then what we're gonna end up with is loads of competition all in the cities and some of the more rural areas will get neglected. I don't think that will happen. It's a small risk, and we're trying to do everything to make sure that doesn't happen. Okay, we just got a few minutes left, Sandra. Let's try and rattle through. I think we've got a few more questions left, so let's go to the next question. Thank you. Okay, our next question, we have a written one from Jerry Dellis from Jefferies, and the question is: How much of next year's guided EBITDA growth to above GBP 7.9 billion is reliant on the 9.3% consumer price increase landing well? Looking beyond March 2023, what would be the drivers that keep EBITDA growing if you're not able to implement such a large consumer price increase again? I mean, I think Simon's sort of covered that. Simon, do you wanna add anything on that? I think you've covered the first half. Do you wanna make anything else on the second half? No, I mean, I think the question was what's driving the revenue growth and sorry, the EBITDA growth. I think we've been pretty clear. Yes, indexation of our prices is an important contributor. In addition to that, we're investing in next generation networks, products and services. We're seeing good take-up of those, and therefore, we do see increasingly strong growth of our next generation products. As the pool of legacy products, progressively declines, that starts to be a forward momentum for us. Then, of course, we're delivering very significant cost transformation and margin enhancement through the business. So those are the big drivers. If you get to beyond FY 2023, Jerry, all three drivers will still be at play. Albeit, the scale of the indexation is unlikely to be quite the scale we're seeing, in the current year. Great. Thank you. Next question, please. Next up, we have Robert Grindle from Deutsche Bank. Please go ahead. Hi, Robert. Just an Openreach question from me, please. Ofcom, I think, said end of last summer, about 1/10 of the Openreach duct and poles had been ordered by users of DPA and about 10% of that delivered. Would it be possible to get an update on progress since then, please? I'm just looking for an inkling as to how quickly those competing wholesale propositions may arrive. Thank you. Robert, that is a good question. We do have the numbers. We're just gonna try and look them up for you. It has increased, by the way, and we've looked very carefully to make sure that on the PIA product, it's working smoothly and is available to all the people who want it. Confirm the fact that there's very significant numbers, I think, from memory. Just bear with me. Where are we? Okay. I'll read it to you. Great. At quarter two fiscal year 2022, since our relaunch of PIA back in April 2019, we have received from our customers notice of intent orders to use 66,000 km of duct. Over 496,000 poles, which is over 10% of the total poles in our U.K. network of 4.2 million poles. Of these, there's been a total build of 7.1 thousand kilometers of duct and 40.6 thousand poles over the last 15 months. I hope that gives you what you're looking for. Yeah, thanks. That's five months out of date, but that's out of date for now. Thanks very much. We've got Maurice Patrick from Barclays. Just a very sort of mathematical one for me, please. Just in terms of the consumer mobile ARPU, can you split out how much of the ARPU decline is due to the change in retail distributions, I guess the exit of Carphone Warehouse, and how much is SIM-only? Be helpful? Just related to that, have those moves driven much of that EBITDA growth in consumer? Thanks. Okay. I mean, firstly, you are right that the mobile service ARPU has been declining. T o be clear, overall, we're pleased with the mobile business performance. Churn's at a record low. Base is actually nudging up, and that includes in B2B. The ARPUs are down due to a combination of trend towards SIM-only, but also the change in channel. I'm not gonna split the differential out for you, but if you go back and look at sort of historic ARPU pressures, that's been amplified by the switch by channel. Of course, the channel switch depresses service revenues, but also gives us, as we sell handsets, uplift on equipment and also reduced costs, which drive the EBITDA. It is one contributor of the consumer strength of EBITDA among a number of others. Great. Just as a very quick follow-up, when will that wash through the impact on service revenues? Will it be in the first quarter or end of the year? Well, if you remember, I mean, it was halfway. It was at the Q3 last year, so it'll wash out sort of over the course of the coming year. Well, I mean, year or two, because there's a continuing base that's declining. Thanks. Your next question is from James Ratzer from New Street Research. Please go ahead. Philip and Simon, thank you for taking the question. I had a question just going back to the maths around, in particular, the broadband ARPU specifically and the impact on that from the inflationary price rise. I mean, I think we can work out mathematically that the percentage of the base times the 9.3% increase, even stripping out the protected customers, would lead to ARPU being up around 6% year-on-year. But what I've been intrigued on is how much drag, though, to that are you still seeing from things like end of contract notification, absolute best tariff notification, and potential churn around the front book pricing. With ARPU today on broadband is still down, running down around 1%, a bit over that year-on-year. It's just how much of an improvement we should see come through next year when we take into account some of those other factors? Thank you. Yeah. You are right that in the broadband market, we have continued to get some drag on ARPU that is, linked to the implementation of what we call more broadly the customer fairness agenda. That will remain a drag through FY 2022, and then there's some further drag into FY 2023, but it'll be substantially more than offset by the indexation. Some attenuation of the growth as a consequence of that, but not a material impact. Does that drag now diminish, Simon? Is that going to be maybe only a kind of one-point drag? We've set out at the consumer briefing, the phasing with which that fairness agenda is impacting the broadband base. We explained the pace with which we're, working through that agenda and that there was still an impact in FY 2023, but it's lower than in FY 2022. Got it. Thanks. Great. I think we're running a little bit over. Let's take one more question, then I think we'll wrap it up. Sandra, could we go to the last question, please? Of course. The last question is from Sam McHugh from BNP Paribas Exane. Please go ahead. Hi, Sam. You're obviously very confident, but on one hand, we're hearing you tell us that the outlook in global enterprises is hugely uncertain. You don't have clarity on the wage increases. Just maybe any more color there, and specifically just to confirm that your confidence on the guidance isn't related to any potential changes related to a BT Sports JV. I don't know if you could tell us a bit how you would think about accounting for a joint venture or whether costs could fall below the EBITDA line. Thanks very much. Sam, thank you. Simon, do you wanna answer that question? I know you can't give too much detail, but in terms of the JV accounting, what's our... No, I mean, we're honestly still in exclusive discussions. We're not able to till we've completed those, we're not gonna comment on the accounting potential impact. We'll do that once we've reached a completed deal. Sam, if you're driving, is that some sort of funny way of underpinning our EBITDA? No, is the answer. Our confidence in the EBITDA 7.9 is unflinching. Great. Thank you very much everyone for joining the call, and Sandra, thank you very much for hosting and, yeah, speak to you all soon. Thank you. Thank you, everyone. That marks the end of your call. Thank you for joining, and have a great day.