Previously communicated. Our accelerated delivery, significant network and systems investment, and relentless focus on our cost base all culminate in a strengthening of our competitive position. This will result in continued network leadership through our best-in-class FTTP and 5G networks. More customers on our next generation platforms at an ever-accelerating rate and a lower cost base with a simpler, modernized operating model. I now wanted to take a few moments to update you on the progress against our five strategic priorities. Turning to slide seven. In consumer, we remain well-positioned to continue driving growth, delivering another strong quarter with pro forma revenue growth of 3%. Pro forma EBITDA grew ahead of revenue and was up 16%, supported by tight cost management and one-offs. We're encouraged by these financials and that our customer satisfaction metrics and leading indicators remain strong. Customer NPS is near record highs, churn remains low, and complaints are still trending below the industry average. This excellent performance results from decisions and actions that have been taken over the last few years, such as our relentless focus on customer experience, including onshoring our customer contact centers. Our market fairness agenda that has seen customers upgraded to fiber with no price or contract change and a significant reduction in our back book pricing differential. Our annual contractual pricing policy, which provides greater transparency for our customers. We've added more customers to our next generation platforms in quarter two than any other quarter. With 121,000 fiber net adds and 308,000 new 5G connections. We're committed to introducing new products and services to evolve our offering to customers with recent launches of EE Security powered by Verisure and Norton and new gaming bundles in a drive to become the U.K.'s number one network for gaming. Now, high-quality connectivity has never been more important for our customers, and our products provide great value for money. However, we do recognize the pressure on the U.K. consumer. It's important to us that those customers that need support in the current economic climate do not get left behind and continue to have access to a decent broadband and mobile. That's why we've led the way and have by far and away the most customers on social tariffs, as referenced recently by Ofcom. We are committed to elevating awareness of our social tariffs, and we're launching a mobile social tariff, ensuring those who are eligible can remain connected on the move. Moving on to our second priority on slide eight, to capitalize on our unrivaled assets in enterprise and global. Starting with our SME and SoHo business, we are pleased to see another quarter of revenue and EBITDA growth. Our public sector business is stable, with BT remaining a key partner across many areas of government and the country's public services. Our security business has grown 10% year-over-year in quarter two, and we'll maximize our leadership position here to continue growing this business ahead of the market. Our wholesale business is annualizing the end of an MVNO contract and is focused on accelerating the move to all-IP and expanding data center and backhaul solutions for communication providers and other telcos. While the annualization of this MVNO contract puts pressure on growth, in enterprise, we have seen a sequential improvement in both revenue and EBITDA from quarter one to quarter two. While we continue to see pressure on our larger corporates and multinational customers, we're responding by pivoting harder to win new business. We're pleased to announce important new contracts, including with Sellafield in enterprise and QBE Insurance in global. We are seeing ongoing declines in our legacy portfolio, of course, but have been encouraged that the growth portfolio in global is performing well ahead of the market. Now turning to Openreach on slide nine, which has continued to FTTP. 800,000 premises in quarter two, and we are the only national builder rolling out FTTP right across the U.K., with 2.8 million of our fiber footprint in rural areas. We've delivered this while maintaining a premium build quality and our low GBP 250-350 per premise build cost, with ongoing build efficiencies and scale economics helping to offset the obvious inflationary pressures. We are also really pleased to see that the fiber take-up has accelerated again in quarter two, despite a higher provisioning work stack resulting from industrial action. The UK infrastructure market is changing quickly. Supply chains are stretched, the labor market is incredibly tight, and financing costs are rising. We are not immune, but we are best positioned. Openreach's scale and experience, coupled with our commitment and balance sheet to fund the build, mean we've never been more certain that we will win the fiber race and deliver strong, fair returns comfortably within our expected range. However, as you all know, we are not complacent. We know others are building, but only Openreach is connecting customers to full fiber at real scale, driving ARPU up and driving costs down. Our Equinox pricing offer remains incredibly successful. 90% of broadband orders in fiber areas are now for full fiber, and over half of these are at ultra-fast speeds. We wanna go even faster to maximize returns on this network and are in advanced discussions with our communication provider customers to sharpen our pricing, strengthen our partnerships, and facilitate even faster migration of existing customers off copper and onto FTTP. In addition, Sky's continuing to ramp up the number of its engineers performing fiber provisions on the Openreach network at a greater scale than we originally envisaged. Now, looking at the key part of this chart, the top right on chart on slide nine, we are very encouraged by our broadband mix, which together with CPI indexation, underpins revenue growth in Openreach over the medium term under all scenarios. We outlined last November at the Openreach business briefing our expectation that the broadband market growth would offset competitor churn. Looking at the bottom of the chart, we saw strong broadband net adds during the pandemic. This did pull forward demand and has resulted in the current lower market growth no longer offsetting the expected level of competitor churn. We consequently saw 89,000, mainly copper, broadband line losses in quarter two. This did include around 40,000 line losses from a higher provisioning work step stemming from four days of industrial action. We expect the broadband line loss trend to continue for the rest of the year. Turning to slide 10. We've moved incredibly fast on our fourth priority to digitize, automate, and reskill to transform our cost base and improve productivity. I mentioned earlier that we're focusing ever harder on our cost base and have delivered GBP 1.7 billion of annualized gross cost savings since May 2020. We achieved this with a cost to deliver of GBP 900 million. This is really strong progress, but in the context of the current macroeconomic environment, higher energy prices, and our unprecedented level of network investment, it's crucial we go even further. As I mentioned, we're therefore expanding our target by a further GBP 500 million to GBP 3 billion of gross annualized cost savings by fiscal year 2025, to be delivered through further system, process, and product simplification, organization simplification, and additional procurement savings. Our confidence in this upgraded target is underpinned by our strong delivery in H1 with recent proof points, including the rationalization of our HR system landscape, reducing the number of suppliers and savings on license fees, the announced closure of over 200 buildings in the U.K. under our Better Workplace program, and a 14% reduction in Global's overseas building lease costs through a program of site closures and optimization. Work in our digital division is delivering genuine business transformation. One fantastic example is our Sweeper app, which is underpinned by our recent deal with Google. This app allows Openreach engineers to identify and input real-time, on a mobile device, additional houses in a street that are commercially viable for the FTTP build. This allows us to connect more homes to full fiber faster, while also obviously keeping costs down. This app has been active nationally since July and already contributed to 4,000 premises to the quarter two build. Our digital journeys are proving increasingly popular with our customers, with a number upgrading to FTTP through our digital channels tripling in just one year. We've also launched our new EE app, improving our digital capability and engagement with the monthly average usage of the app up 24% since launch. In networks, another example, we've now migrated millions of customers onto our converged core, the first of its kind in the U.K. We are making efficient use of our spectrum and have already started refarming 3G spectrum into our 4G and 5G network, cementing our network leadership position. Finally, on slide 11, in making sure we optimize our capital allocation and business portfolio. We have completed the sports joint venture with Warner Bros. Discovery in a very attractive partnership that will improve our proposition for consumers, reduce our exposure to sports rights auctions, and gives us greater strategic optionality over the medium term. On the capital side, we are pleased that the BT Pension Scheme funding deficit remains stable at GBP 4.4 billion as at June 2022, and that the BT Pension Scheme have managed well through the recent period of gilt market volatility, with no worsening of this funding position since June. We're also pleased to see the IAS 19 deficit remains relatively low at GBP 1.7 billion as at the end of September. To conclude on slide 12, we are accelerating our growth strategy. We're investing heavily in our next generation networks and lowering our cost base by a further GBP 500 million, leading to a strengthening of our competitive position. We are operating in difficult economic circumstances, of course, but we have a robust strategy, a strong plan that we are executing well, and we are reiterating our long-term growth ambition. CapEx is higher than we had forecast this year at GBP 5 billion, but this is good CapEx due to higher provisioning, and we expect to retain CapEx at GBP 4.8 billion for the rest of the peak fiber build as we exercise ever stricter discipline on legacy spend. Beyond the peak fiber build, we continue to expect at least a GBP 1 billion reduction in CapEx flowing through to normalized free cash flow, with an additional half a billion pound uplift by the end of the decade as we benefit from an all-IP, all-FTTP network. This is a clear route to more than double our fiscal year 2022 normalized free cash flow before the benefits of revenue and EBITDA growth. All of this combines to underpin our progressive dividend policy with the interim dividend of GBP 2.31 per share confirmed today. With that, I'd now like to open up to questions. As usual, could I please ask you to stick to one question? Operator, please could we go to the first question. Certainly. Thank you. Allow me to inform our audience. If you wish to ask a question, please click on the Raise Hand icon at the bottom of your screen. If you'd like to withdraw the question, please click on the hand again, and please kindly keep it to one question at a time so that everyone can participate. Thank you. With that, our first question comes from Akhil Dattani from JP Morgan. Akhil, please go ahead. Hi, Akhil. Can I start with a question on pricing, please? It's got two parts to it, but hopefully it's quite quick. The first is we look at Q2 numbers, it looks like the broadband growth has slowed a bit. The broadband ARPU growth and the churn's ticked up a little bit. I mean, they're all very small changes, but I guess it would be useful to get some understanding and color on your confidence and sort of what you're seeing around the prices sticking or if there's any sort of sign of churn or discounting. The bigger picture part of the question is that I'm sure you've seen comments from Ofcom, where they've said that while pricing is regulated in the U.K., they would like telco operators to scrap their annual CPI price increases for April. Obviously I'm just keen to understand, you know, your response to that and what your likely intentions are. Thanks. Sure, Akhil. Look, a key topic. I mean, you know, for this year, you know, everybody knows the pricing changes that were made in April 2022. You know, that was announced to our customers a long time in advance. It's totally transparent, and that whole program has gone extremely well. You know, there's the consumer business in terms of its customer base is nicely in equilibrium. It's balanced. The net promoter score is good. The churn's low. Customer complaints are low. The value for money scores continue to be good. That's this year. There's no challenge at all to the balance of what we measure on the consumer side. As we look forward, you know, we are gonna be putting our prices up by CPI plus 3.9% next year. The reason for that is very, very simple, really, which is, you know, we're experiencing significant inflation. The whole business is under pressure like every other company and every other household. You know, energy costs are up significantly, but it's across the board, right? We have to put in CPI. But equally, we've got to fund this huge investment. You'll have noticed today that CapEx is significantly increased, okay? That's partly due to inflation. There are other things in there, excess provisioning, you know, the stuff about the 6 million additional sort of pipeline of FTTP. These inflationary pressures we are seeing, we're also investing heavily in the future. The 3.9% above CPI is funding that investment, which ultimately is leading to fantastic customer experiences in FTTP. You can see it in the ARPU, right? Our customers are happy paying higher prices for FTTP, and we are still great value for money. That, Akhil, is the most important point. The thing that we measure so carefully is the value for money of our core proposition. No one likes seeing prices go up. Unfortunately, in this environment, they just have to go up, because otherwise we can't balance the books and fund the investment. The most important thing, as I say again, is when you look at what we offer for about GBP 1 a day, you can get exceptional connectivity, both for fixed and for mobile. Our second question comes from Andrew Lee from Goldman Sachs. Andrew, please proceed. Good morning. I had a question. I guess the other side of the question to Akhil's question. You answered, I think, really helpfully on the consumer pricing power and stickiness. I guess all investor pushback today on your results revolves around higher spend on fiber, but questions around the monetization. I wanted to just ask on the wholesale side of things. The question really is simply AltNet pressure rising and/or your broadband pricing power outlook faltering? Because, you know, what investors see is obviously your comments around sharpening the pencil on Openreach wholesale fiber pricing, get that can accelerate migration. Is there another side to it, which is that you're just seeing more network competitor pressure? Investors are also seeing that acceleration of the line loss to, let's say, your Openreach broadband line loss to 49,000, as you mentioned, in your release. How do you reassure investors that the balance between price and volume is still heading in the right direction and that network competition pressure is not actually rising, structurally rising? Yeah, Andrew, great question. I mean, the short answer is do we see increased network pressure? No. What we see is a situation where we have never felt more confident about our FTTP investment. Genuinely, honestly. The reason for that is, yes, the build. The build is going extremely well, 9 million. We've also got in the pipeline another 6 million. We can see those 6 million. We know where they are exactly. We've already started building some of that infrastructure. The connection rate at 27%, and that's the most important number to stare at. At such an early stage in the build, we've got 27% connected to FTTP. The stats on selling FTTP in fiber-only areas are amazing. The reason I say in terms of the network pressure, it's all about customers now. It's not about the build anymore. We're gonna finish the build, it's all about connecting customers, and that's the most important thing. What we wanna do, Equinox 2 change, is to help migrate as quickly as possible to get us off copper and get us onto fiber as quickly as possible. 'Cause the answer to your last question, it's all about the ARPU, right? Look at the ARPU. The ARPU is up GBP 1 year-over-year. That's 6.5% on average. We're moving people off old stuff into much better technology at a higher price where they're happier. We couldn't be more confident about the FTTP program, and we're delighted with the progress being made at Openreach. Look to see us go even further, and that's why we think it's a very sensible decision to spend GBP 5 billion this year, which is more than we'd originally thought. Our next question comes from Nick Delfas from Redburn. Nick, please go ahead. Just coming back to this issue of GBP 7.9 billion. Obviously, you made some good progress in the first half of the year, but there are also quite a lot of one-offs. There's a one-off, I think in consumer, there's a one-off in enterprise. You've deconsolidated BT Sport that might save you GBP 40 million. Could you just give us a quick roundup of roughly the size of those and also for any negative offsetting ones? I mean, looking at it from a very high-level basis, maybe there's GBP 100 million of extra stuff contributing to the GBP 7.9 billion, but just some sizing. Thanks very much. Yeah. I mean, Nick, let me just say a couple of things. I think if you just step back, you know, I'm really encouraged by where we are today. Genuinely, too, you know, two years after talking about GBP 7.9 billion, in an economic world which is fraught with challenge and uncertainty, we're growing revenue, growing EBITDA for the half year in line with what we would be doing. We're reaffirming our outlook at GBP 7.9 billion, despite obvious pressures that everybody knows about. You know, I joke about we'll deliver that under any imaginable circumstance. Well, there are loads of things I didn't think of. I didn't think there'd be a war. I didn't think energy prices would do what they did. I didn't think inflation would be double digits. I didn't think interest rates would go up as they are. There's loads of things that we as a company have dealt with, and I think we've dealt with them really, really well. To say that we're still on GBP 7.9, I'm delighted about, and the team should take great credit. I mean, my leadership team to deliver that GBP 7.9 billion in the year will be a great achievement. Yes, there are lots of moving parts there. Let me just give you a couple of other thoughts. You know, that's a GBP 300 million improvement if we do it versus last year. You know we've taken an energy hit of over GBP 200 million this year compared to last. Our MVNO is about GBP 100 million. That's a GBP 600 million swing right there, improvement. I think that's a pretty good result. Yeah, of course, there's ups and downs in it and any business like this has one-offs. They're not really one-offs, actually. I'll let Simon give you a sense of them, but they're just things that are individual items that for good order, we separate out for ourselves, so we understand it. Simon, do you wanna add anything to that? No. Philip, I think you made a key point. I mean, the underlying business performance has, you know, has improved by over GBP 600 million, as you've just said. We have rightly called out there've been some non-recurring items in H1. I mean, it's sort of mid- to high tens. You know, these are not unusual for a business of our size and scale, and they're completely dwarfed by the underlying improvement. What are they? I mean, there's some movement in rebates on trading between last year and this year. Why? Because we actually traded better than we'd anticipated in the year. We did have a VAT settlement. Well, that was a small number. In addition to that, yes, there's a modest contribution from WIP, but that's been vastly overplayed. Remember that, you know, from the BT Sport, because the business was improving in the course of this year. There's only six months of it, so that's really in the noise. I think we feel very confident on the at least GBP 7.9 billion. Hope that helps you, Nick. The following question comes from Carl Murdock-Smith from Berenberg. Carl, you may proceed. Hi, Carl. Debt mix today. In 2020, BT moved its management share options away from incentive share plans to restricted share plans, creating a lot more certainty. Mm. Around the size of the buybacks that you will have to execute to offset the dilutive impact of these options. Last year, you bought back GBP 184 million of shares. In H1, you've bought back GBP 138 million, in large part leading to the net debt miss today versus consensus. Yet, when I look at consensus, it only forecasts about GBP 40 million per year going forward, which I view as materially wrong. I wanted to ask if you could provide some guidance on this line going forward, and whether you would agree or disagree with my view that consensus is currently wrong by GBP 100 million or even more each year on this cost line. Thank you. Well, I think consensus appears to be wrong in the prospects for the business, and therefore it might cost us to buy back some shares. The core point, Carl, is yes, we are undertaking, as you know, we've repurchased shares to cover employee share schemes. I'm not gonna give guidance for subsequent years. On total net debt in 2019, it's not a material number. Thanks. That's great. Thank you. Our next question comes from David Wright from Bank of America. David, you may proceed. Hi, David. Thank you. Sorry about that, guys. It just took a while to go through the online meeting process. Just on the 40,000 lines you have flagged, the broadband line losses due to the strike action. I guess if we just annualize that, you know, and potentially with some increased strike action that I think is even planned, then we could be talking like a sort of 200,000 broadband line loss impact. Am I just kind of thinking about that all wrong? The only reason I just think about that is you guys are still standing firm with your offer to employees right now, but this is really quite material disruption. I'm just wondering how you're thinking about that, and, you know, what measures you can take to offset that risk or how even those discussions with the unions are going at all? Thank you very much. Thanks, David. I mean, David, these 40,000 lines, they're missed appointments effectively as a result of the industrial action. It's four days where we weren't able to deliver on our customer commitments, which obviously is very disappointing. We'll make those up eventually, right? Now, of course you're right, there may be a few cancellations in there inevitably, but we're absolutely determined to make those up. Of course, we hope that the industrial action doesn't carry on by definition, and we're working really, really hard to find a way forward where we get back to a more normalized situation within BT. I just on the point with our CWU partners, and they're a really important partner. We're always talking to them, you know, and I'm really, really hopeful we'll find a way forward. To be crystal clear, the pay award that we described for April 2022, that matter is now closed. We're just moving forward, trying to work out what we do going forward for our people and we wanna do the right thing by our people, of course. You'll get the point, we're trying to balance all the different competing pressures on the business, deliver our commitments to the market, to our shareholders, to our pension holders, to our employees, and to our customers. I'm pretty confident we'll be in a good situation over the next few months, but we've got a lot of hard work to do. The next question comes from Sam McHugh from Exane BNP Paribas. Sam, please go ahead. To come with the dividend. At the time you talked about tax, working capital, interest and leases in the region of GBP 2 billion, which consensus has at the moment. Obviously a few things have changed, whether it's tax, the slight cash benefit of the EBITDA boost from the sports JV, you know, inflation, interest costs. Is this GBP 2 billion below the line items for all that stuff? Yeah. Still the right ballpark? Yeah. How are we thinking about the dividend coverage in light of that target and the below the line cash items? Thanks. Can you hear all that? Sam, we missed the first part of your question. I think you were asking whether our expectation of normalized cash flow outside of CapEx remained at about GBP 2 billion. We didn't hear whether you were referring to this year or next year. Could you just clarify that for us, Sam, so we can help answer? There you go. Yeah. Sorry. Yeah, yeah, exactly that. I was saying in the future, if I look at consensus, and you had talked about this GBP 2 billion roughly in the medium term as kind of a level of the cash items to explain the dividend coverage. Mm. Is that GBP 2 billion still the right number? Pretty much. Yeah. It has not changed, Sam. That is sort of in line. It's a combination of leases, which you've got pretty good visibility of. It includes interest and tax. We will have a bit of a step up in tax, as we've always said, next year. But equally, you know, we're managing. We've got a lot of working capital improvement that's flowing through. No, that's a good handle for those items as we move forward. The following question comes from Jerry Dellis from Jefferies. Jerry, please go ahead. Hi, Jerry. Jerry? Jerry, could you please if you're not on mute. We'll move on to our next question, which is coming from James Ratzer. James, please go ahead. Hi, James. Can you guys hear me? We can. Yeah. Good morning, Philip. Thank you. I was very intrigued and interested by the comment you made earlier that you are going to go ahead with the CPI plus 3.9% increase next year and tie that to your costs. -growing, which presumably are the costs that BT Consumer effectively faces, of which one of those is obviously the payment to Openreach. Does this mean that with the Equinox 2 pricing that is being talked about, you are still going to be sticking with CPI increases on Equinox 2? I'd just love to get a little bit more detail about how those might be structured. I was really wondering whether actually BT Consumer's costs wouldn't be going up as much as CPI, if a price cut is potentially being thought about at Openreach. Thank you. Sure. I mean, I can't go into details on Equinox 2, okay? That's a very important piece of work which we're working with our CPs and Ofcom. It by definition means that we are offering better value for money, right? And there are changes in that which have some reductions by definition again versus what we currently do on Equinox 1. So I guess the CPI plus 3.9%, again, I tried to explain in my previous answer, it's so important that you don't just look at it as the price. It's the whole business in equilibrium. Will our customers feel good about what they buy from us as we put our prices through? I think you've got to remember what we did a few years ago is we corrected some of the anomalies that we had in our consumer customer base. We spent, you know, from memory like, I don't know, GBP 250 million-GBP 300 million correcting some of the places where our customer base was pretty out of kilter with what was delivering great value for money. As I said earlier, we monitor the hell out of that. Now that we are putting our prices up as we have done last year and this year, the reasons for it are all the inflationary costs we're experiencing across the whole business, by the way. You know, it's not just consumer. Don't look at it as consumer. You know, they rely on a 5G network. They rely on our core network. They rely on all the network activity. They get all the benefits of IT and technology, all our buildings. I mean, don't look at it as just in isolation. The total business has inflationary cost pressures and is investing enormously for the future benefit of all of us. Therefore, the CPI is a reflection of inflation, and the 3.9% is a reflection of the massive investment that's going in to benefit all customers and all stakeholders. The following question comes from Maurice Patrick from Barclays. Maurice, please go ahead. Hi, Maurice. We can hear you. Can you hear me okay? Yeah, we can. Yeah. Great. Sorry. You never know these days, only two years into post-COVID. A bigger sort of value versus volume question, please. Mainly for consumer, but I guess it applies also to Openreach. Now, I recall a couple of years ago, you sort of overtly moved to protect your consumer base by effectively cutting price on some of the back book, saying you didn't want to lose customers. You're signaling today that you're gonna put through another CPI plus 3.9% increase year. Maybe run some risk of a loss of market share going forward. I guess, are we going back to a value over volume approach for the next couple of years while you're defending those cost increases? I guess the same question kind of applies to Openreach too. The short answer is no. It's too simple. That is an overly simplistic way of looking at it. It's right in the middle. We wanna make sure we've got the high market share of the customers that we want. When we, as you said, cut prices for the back book, but we didn't actually cut prices alone. We changed some of the propositions dramatically. We added more products in, we provided Halo, which is a key thing, and we also sort of added other things to the bundle and also in certain cases reduced prices and moved people from copper to fiber. There was a whole range of things that made sure each customer segment was getting great value for money that brought churn down, brought complaints down, and increased NPS. What we're doing now is, yes. If you look at just price, of course, prices are going up. You see it in our numbers now, and you're gonna see the numbers going forward. There are lots of things changing below that, right? That's all about delivering the right thing for each customer segment, and price is just one part of that. The proposition is changing too. Under the banner of that price, people are getting more value. That's what I'm trying to drive at. Where we feel really good is that the BT Consumer, and in Openreach for that matter, the NPS and the value for money scores remain absolutely where we want them to be, as do the churn, by the way. Don't think of it as a change in strategy of value versus volume or volume versus value. It's all about getting the right balance. At the moment, that balance is working. Moving to John Karidis from Numis. John, you may proceed. Hi, John Karidis. Hello, can you hear me? I can hear you now. You're on mute, John. I can see you now. You're green. Okay, great. Excellent. Thanks. A year ago in a briefing to the City, Openreach put up a slide that said that on the worst case scenario, Openreach would lose about 600,000 lines over seven years through the end of 2028. In the last two quarters, it's lost 30,000 lines. Could you help me sort of square the point that you made about network-based competition having no impact on Openreach? Sort of related to this, maybe your answer is gonna be value again, but I wonder whether that matters in now that we have a cost of living crisis. On the one hand, you're cutting your wholesale prices, so potentially choking off net infrastructure-based competition, and on the other hand, you're increasing retail prices. How do you sort of convince Ofcom that this is to the benefit of citizens going forward? Okay. Let me do the last one, and maybe Simon. I've already sort of answered the first one, I think, so Simon, you give your perspective on Openreach line losses over the pressure. We'll talk about, you know, the overall business case and what we assumed, but Simon can do that for you. On the whole, I mean, let's be clear. The wholesale prices of broadband through Openreach are going up. So, you know, they are index-linked to different degrees, and there are some specific things around certain types of products. But basically, there is indexation on Openreach, and that's not gonna change. That inflates the wholesale prices, and then obviously that's part of the reason why the customers of Openreach have to pass on those price increases. That's a well-recognized dynamic that was agreed a long time ago. You're seeing overall indexation at wholesale and retail is gonna happen. What I'm really saying to you is, you know, we're actually committed to the CPI plus 3.9%, as a mechanism for funding the investment that we all so badly need to get to the new technology that we know people value. There's no shortcut to delivering that, and that's what we're gonna do. Simon, do you want to give your point on the line losses and- Yeah, sure. I think we covered it, John, but we were pretty clear in the business briefing that we expected to see some very modest loss of broadband lines. We saw that as a function of loss of market share to competitors, given that they are building. Secondly, that would be compensated for by a combination of homes coming new to broadband, and secondly, new homes. We quantified that for you at the time, as I recall. It's something like 300,000-400,000 a year. What has changed in the last sort of six-nine months is we have seen slightly lower new home build, which is conceivably a function of the macro situation. Secondly, as Philip described, we've seen fewer new homes to broadband, which is now very apparent was due to a huge pull forward during the pandemic. Going forward, we would expect, well not in this year, but certainly over the next two or three years, we'd expect the rate of new home build to pick up again to meet the sort of government targets. We would expect the large number of homes still not on broadband to come back into the market. But it'll happen over the next two or three years. Final point I would make, which I think Philip also made, do remember that the real driver of revenue is the ARPU uplift. The ARPU uplift by moving people to higher speed FTTP product is what gives us confidence in the revenue. The year-on-year increase in that dwarfs the very small reduction, I think it's about 40 basis point reduction, in the broadband lines. Finally, of course, moving onto an FTTP platform dramatically reduces our costs. That thesis for the Openreach business case remains absolutely intact. John, that is why I said at the beginning, we've never felt more confident about our FTTP investment case. Not just the investment case, the strategic advantage it gives BT, that's gonna last for decades. You know, it's what Simon said, the financials of it are like no-brainer, right? We're just accelerating it, getting on with it. Customer connections 27%, higher ARPU, lower fault rate, lower costs, better service, higher satisfaction. What's there not to like, apart from it's expensive to get it done, but you only do it once in a generation. Up next is Georgios from Citi. Georgios, please go ahead. I've got one question around the energy costs, more in the medium term. I just wanted to understand the options that you have, around PPAs, in the next few years in order to give yourselves and also give more clarity to the market around your long-term energy needs and costs. If you could give us an indication of what's the average price you are paying now versus what the PPAs can offer you, it could perhaps give us a bridge over the next couple of years to have an understanding, despite the volatility, what the end game could be in terms of costs. If it's possible, apologies for that, but I just wanted one clarification around your fiber CapEx, because you mentioned with the Equinox 2.0 that you expect, faster connectivity, and migration of customers. I'm just curious, the GBP 200 million reduction in CapEx next year, while I'm guessing a lot of the connections will happen next year, is it coming from other areas, from efficiencies? I just wanted to maybe clarify that point. Thank you. I mean, look, we can't get into the individual details of our energy PPAs. I'll say something, then maybe Simon chip in. You know, obviously extremely challenging energy, very important for us, big number. We've been transparent about how much extra we're paying, year on year, GBP 200 million. Actually give credit to Simon and his team. I mean, we are on this, you know, daily, with another member of the exec, looking at it really carefully. We've done as good a job as anyone could have expected, given the circumstances. We're very thoughtful about what we do going forward, given the volatility. We don't tie ourselves into a position that then looks a little bit uncomfortable in a year or so's time. Getting the balance of hedging and spot market and PPAs, getting that right with key partners is really important. Simon leads that effort. I would just reassure you, we're not short of data and info and perspective on what to do. We think about it very carefully, and we look at it all the time. Simon, do you wanna add anything to that? I mean, give some sense of how we think about PPAs and Well, I mean, I think. Hedging and stuff. Yeah. I mean, we're not gonna give you the go into the details of demands and prices and so forth, but I think you've got information that allows you to piece this together. We told you our energy prices went up GBP 200 million. We told you about 80%-85% hedged. That will allow you to figure out kind of approximately what the current contracted price is. What I can tell you going forward is that we're about half hedged for next year already, and those were hedges that were actually put in place early part of last year. They're actually rather better than our hedged price, all-in hedged price for 2023. That's good. The other half, obviously, we do face market exposure, but we are seeing, you know, much more activity among PPA providers, both physical and virtual. You know, we will manage the energy position as we have done this year and deliver on our EBITDA growth into next year. Great. Thanks. The following question comes from Nick Lyall from Société Générale. Nick, please proceed. Hi, Nick. Hi there. Great. Just a question on Enterprise, please, on the EBITDA. When I take the MVNO losses for the rest of the year and some of the one-offs, it still seems as if you need slowing declines in the underlying EBITDA numbers. In other words, an improvement in either the SME or large corporate position. Could you just update us on how they're both going? It doesn't seem like the sort of environment you want to be looking for an improvement in underlying trading. If you could just maybe give us something on SME and large enterprise to give us some context. Yeah. I mean, let me give my experience, and Simon can chip in. Look, I think as I said in my earlier remarks, you know, the SoHo and SME areas are growing, and you know, we're in good shape there. I mean, there's always more to do. And we've got lots of work in the background in improving some of the things we're gonna offer our customers in both those segments, right? So I think we've talked about that a few times before. So again, that's trajectory is reassuring. It's good, but there's always more to do. I think you're right to say it's in the other part of the business, which, you know, we sort of call corporate and public sector. These are the larger accounts, which includes some of the government contracts, which by definition are lumpy. You know, there are larger contracts, managed service contracts in that. Yeah, we need a bit of a bounce back in the market, of course. There's still a bit of a COVID hangover in terms of the amount of activity, change controls, you know, new developments, new ideas. It's not quite there, versus what we used to have. Again, Rob and the team are working really hard to pivot and reorientate that business to be selling more of the newer, higher growth things, which you know about, and move away from the legacy. It's the same old challenge which we're working on. Simon, do you wanna add anything to that? I think, I mean, the businesses, if you add global and enterprise together, business was up sort of GBP 30 million-GBP 35 million, Q2 on Q1. We're seeing, you know, momentum restored, as we said. We're seeing, you know, sound trading, you know, in the volume part of the business. It is, you know, there's challenges in the large corporates. We've been very clear about that. The teams in both businesses are doing a fabulous job in working with customers to build the pipeline, and you've seen they've grown. Yeah, I think there is the cost transformation opportunity there. They've done a great job delivering on it and they will do more. Yep. It's a tough market. The business is gonna get back to growth over time. Thanks, Nick. Moving to Robert Grindle from Deutsche Bank. Robert, please go ahead. Hi, Robert. Yeah, we can hear you loud and clear. Super. Thanks. A quick clarification on the strike's impact. Do you save wages on strike days, or is that offset by penalties from missed visits? If you raise prices by CPI plus, is it sustainable to argue for your sub CPI wage increases? I saw some trade press on giving resellers access to EE under the Partner Plus scheme. Is this a major thing? Is the idea to offset MVNO losses via resellers? Thanks. Simon, can you do that last one quickly? Well, I just make sure I got those down. It's a small thing, immaterial in the scheme of consumer and BT. Okay. Small thing. Great. Okay, on the strike's impact, I mean, best way to describe it is, you know, we're desperately sad that our staff have gone out and taken industrial action and gone on strike. Of course, it's not good for anybody. It's not good for the company, it's not good for our customers, it's not good for our people, it's not good for the union. It's a sad situation, which we're very disappointed on, and we're working really hard to get some way forward out of that. From a financial point of view, the impact is modest, right? It hasn't really hit us from a financial point of view. But I'm not. I prefer in some way if the financial was bigger, but the morale wasn't so bad. You know, I'm being honest with you, it's very tough inside the company when you've got that kind of industrial action. Financially, not that big because we've managed and mitigated it really, really well. Therefore, you know, whether it be answering 999 calls, handled perfectly all the way through to delivering for our customers across the board. There are some impacts, and the one that we've been transparent about is this 40,000 deferrals in Openreach, which we haven't got to because our people weren't there on the day to connect our customers. We'll make it up. We've got very clear plans to make sure those people are contacted and put back in the work stack, and of course, a few will fall out. We're doing everything we possibly can. I mean, specifically, people lose pay. That's why it's so sad. All right. If you go on strike, you don't get paid. There's limited way to make that up, right. We're really keen to find a way out of this, but the pay award that we made in April, which was, as I say, industry leading, better than anybody else in our industry, that matter is closed. I'll always talk, and we will always talk to anybody about what we do in the future, and we wanna do right by our people, and we wanna help them as much as we possibly can, particularly the lower paid deal with the cost of living crisis. Again, I mean, you know, again, just so you know it, linking it to our CPI plus price increases. You know, we're a business here, right? We're here to deliver commercial outcomes for all our different stakeholders and make sure that BT has a bright future and is stronger relative to its competition. We are definitely doing that. I'm not putting that at risk for anything. What we can't afford is to get the balance wrong. Those price increases, I said before, are funding progress and investment. That investment is to the benefit of everybody. It's making sure that for our customers things are better, and therefore also by definition, that we can provide employment for our colleagues and the prospects both for customers and our colleagues are bright in the future, and we don't run out of road. That's what we're doing. Up next is Adam Fox-Rumley from HSBC. Adam, please. Thank you very much. Just had a question about the new cost savings, please. You gave us a few bullets of detail in the presentation, but I wanted to ask if those are new plans or whether they're longer-term plans that are being brought forward and the extent to which the kind of detail is being fleshed out there. On the subject of efficiencies, I just wondered if I could re-ask George's second question about delivering a step down in CapEx alongside a faster pace of FTTP connections and the balance there, please. Yeah. Look, the short answer is on the new cost savings, it's in three buckets. You've mentioned two of them. The first bucket you didn't mention is existing activity even harder. New, yes. Anything that was in longer term, trying to bring it forward. You know, leaving no stone unturned to reduce unnecessary costs, look for wastage, look for duplication, use technology to automate whatever can be automated to make it lower cost, more efficient, better for customers. It's the same stuff. It's across organization, procurement, systems, technology. I literally want everybody at BT looking at how we spend our money and treating it as though it was their money. It's a doubling down. We've got a good track record. We know how to do it. We've delivered the GBP 1.7, now it needs to be GBP 3. We've gotta get cracking on that. On the step down in CapEx, look, you know, the decision to go to GBP 5 billion this year is a really good decision, right? The discipline is still there. We can afford it for the reasons that Simon and I have mentioned and on the tax credit, but GBP 4.8 billion is the right number. That doesn't mean that's an easy number, by the way, right? We have to be very, very disciplined in how we spend that CapEx, but it's a big number. We will be continuing to drive fiber hard on build and on connections, but there's lower copper CapEx needed, right? More discipline across every element of CapEx just has to be exercised when you're phasing into very challenging, difficult economic circumstances. At the end of the day, let's not forget, cost savings improve CapEx. The following question comes from Andrew Beale from Arete. Andrew, please go ahead. I've just got a question on cash flow impacts from the BT Sport Warner Bros. Discovery JV. I guess we can now see the financial obligations for the minimum guarantee, the GBP 74.5 million gross of the tax credit at GBP 186. Then on the other side of the equation, you've obviously got the deferred and contingent consideration, which I guess are largely offsetting. You've got a new revolver for working cap. You've got other working capital settlement. You've got the AFC prefs. You've got a modest benefit on pro forma EBITDA going forwards from the deconsolidation. I'm just wondering if you can set out which of these multiple effects might land in your normalized free cash flow. Alongside that, whether there are any ongoing net cash impacts outside that definition. I mean, the cutting through that as we move forward, clearly the minimum guarantee, offset by obviously the revenues we generate from selling those rights flows through, the normalized cash flow, as will the distributions that we receive, you know, from the JV. Those will be the two impacts as we go forward, and you'll see those as we go into the second half and into next year. Thank you, Andrew. The next question comes from Jakob Bluestone from Credit Suisse. Jakob, please go ahead. Hello? Hi, Jakob. Hey. Quick question regarding the cost savings. You mentioned in the press release or the press presentation earlier today you talked about reducing jobs in a controlled manner. I just had a question around your absolute headcount levels. They actually went up this quarter or this half year. You went from about 98,000 employees to 100,000. If you can maybe just give a little bit of color, you know, how come your headcount's rising? Thank you. Yeah, good question, Jakob. Simon can just give you that. Sure. I mean, the headcount rose slightly in the half, as you said. There are two things going on. Firstly, you know, we continue to see a step up in our build activity in Openreach, and we are favoring internal direct labor over subcon. So there's a switch essentially there from subcon into direct labor. In addition to that, we're also, as a matter of strategy, moving more of our external subcon in our digital environment in-house, and so that's also increasing our own employees, but reducing subcon. Those are probably the two main factors that are at play. You know, typically we're doing that because from a total labor cost perspective, it leads to a cheaper, better, more efficient outcome, and more importantly, a more effective delivery. That's what's driving the core, the direct labor being offset largely by even more significant reductions in subcon and our plans to bring down and deliver the, you know, total labor cost growth savings very firmly on track. Our next question comes from Polo Tang from UBS. You may proceed. I have a question about CPI indexation. In Equinox 2, you mentioned that you intend to keep CPI indexation for Openreach wholesale pricing, but would there be a ceiling on this? Otherwise, does this not risk communication providers transferring volumes onto competing AltNets, given that AltNet pricing does not necessarily have the same degree of CPI indexation? On this topic, you've mentioned that you'll press ahead with CPI plus 3.9% increases in Consumer, but is this sustainable given that front book pricing does not seem to have increased and operators like 3UK have 4.5% absolute price increases built into contracts? You have Sky and Virgin Media only having ad hoc increases. Therefore, is there not a risk that other operators put through much lower increases to take share from BT Consumer? Thanks. The short answer to the last question, of course, there's a risk. And on the CPI indexation with Openreach, you know, what I'm trying to say, though, is whatever happens, there is indexation on Openreach's lines. Right, copper and fiber. I'm not gonna get drawn into the detail of Equinox 2 because that is a confidential document that is going through the CPs and Ofcom. But we feel really confident that that is a very competitive proposition that will help everybody, our customers, and the end consumer get outstanding products and outstanding technology at very good value for money. From a business case point of view, this makes total sense. To your core question, which is under sort of... Under both of the Openreach and consumer CPI indexation pricing, the underneath both of those questions is: Can we keep the equilibrium in the right place so that our customers are happy and we keep the customers we want? The answer is we really believe so, 'cause we've spent years carefully thinking through how each segment is looked after. I go back to what I said earlier. It's really important to understand it. We're quite sophisticated in the way in which we think about customer segmentation, and it's not as simple as a price change. When you look at the different segments and how we approach them and what we offer them, we're really, really quite advanced in making sure that's tailored to the circumstances and tailored to the individual in the right way. So far it's worked. I will say to you, of course, if there are massive changes in competitive dynamics, of course we'll respond, 'cause I've always said to you, we're not losing market share. We haven't lost market share since I've been here, and we're not gonna start. What I'll also tell you is other people seem to make price increases in a more random fashion sometimes. They're not necessarily lower than ours, but they're not as transparent as us. We wanna be clear with our customers, this is what you get, this is how your prices are calculated. They know what's happening. We communicate to them, and we make sure we're always providing the best value for money we possibly can, above and beyond just price. Gentlemen, we have received a question from Jerry Dellis from Jefferies via email, and the question is: Slide nine suggested that the broadband market was flat in that Openreach is losing actual ground to. What gives you the assurance that alternative networks might not be gaining some traction? Thank you. Yeah, look. Simon, I mean, look, the broadband market is not growing. It has done historically. That is true, right? That's to do with the economic backdrop, and probably some market pull forward from COVID. Yeah, so you can see what's happened when the market's growing, you can see what happens to our line. So we are losing less share than we expected. So whilst, you know, I said earlier, you know, there is a lot of build out there, the key thing is connections. I keep saying we've gotta think about the connections, 'cause building the network, once you've got the money and a bit of operational expertise, is easy. It's connecting customers ultimately will make a difference, and that's why we are so concerned and happy with the activity of the 27%. Right? 27% connection rate is what's important, and that's what we're focusing on. When we look at the overall business case, and Simon mentioned it before, the ARPU change, the customer satisfaction change is so important that the investment of GBP 15 billion never looked more attractive than it does now. Thank you. Our final question comes from Stanislas Noel from Bernstein. Stan, please go ahead. Hi, Stan. Can you hear me well? Stan, I can hear you. Oh, okay. Cool. Just a clarification. Sorry, I know this was covered in a previous question, but going back to the, you know, the wholesale pricing update for Openreach that is where you would like to have an acceleration of migration to FTTP. Is this acceleration embedded in your assumptions for the GBP 4.8 billion of CapEx in the coming years? Thank you. The answer is yes. Yeah. I think yeah, the question I think we caught it, which was, we are seeking to really drive continued fast take up in Openreach FTTP, and is that delivery on that reflected in the GBP 4.8 billion CapEx that we guided to as peak and for next year. That's what we heard the question to be. The answer to that is, yes, it is. You know, we're confident in delivering our capital plan at GBP 4.8 billion. Huge opportunity to improve our CapEx productivity through our cost transformation efforts. Also, you know, rigorous prioritization, which we do as a matter of course, a lot of opportunity to prioritize away from some of the areas of legacy spend. We just take an example on non-fiber CapEx was down something like 20%-30%, so far in a year. It just gives you a sense of we're pushing back on non-strategic CapEx. Hope that helps you, Stan. Thanks for the question. Thanks, everybody. I think that's the end of our call. Appreciate all your questions, everyone, interest in BT. See you soon. Thank you.