Good day, and welcome to BT's trading statement for the first quarter, ended on the 30th of June 2022. My name is Ben, and I am your host today. During the presentation, your lines remain on listen only. If you would like to address all parties, this conference is being recorded for replay purposes. Now, I would like to hand it over to Mark Lidiard. Please go ahead. Thanks, Ben, and welcome everyone. Before we start, I'd like to draw your attention to the usual forward-looking statements in our press release 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 press release and the annual report can be found on our website. With that, I'll now hand over to Philip Jansen, Chief Executive of BT Group. Thanks, Mark. Good morning, everyone, and thank you for joining today's call. I'll briefly go over our financial results before updating you on our progress against our five priorities to deliver long-term growth at BT. As you'd expect, like many businesses, we are balancing inflationary and economic pressures. However, we are executing well against our strategy and delivered a strong performance in quarter one, returning to both revenue and EBITDA growth. Revenue growth of 1% was supported by better trading in Consumer and Openreach, which was partially offset by the migration of an MVNO customer, continued legacy declines, and challenging market conditions impacting large corporates in Enterprise and Global. EBITDA was up 2%, generated by revenue growth, combined with strong cost control. Reported CapEx, excluding spectrum, was up 24% due to increased investment in our next generation networks and the impact of inflation. Normalized free cash flow was an outflow of GBP 205 million, primarily driven by the phasing of cash CapEx. Due to this phasing, obviously, we expect normalized free cash flow to be heavily weighted towards the second half of the year. I'd now like to take a moment to update you on the progress we're making against each of our five priorities. First, growth in consumer. We delivered a strong first quarter with good performance across all metrics, including another record quarter of full fiber connections and strong customer service. Revenue and EBITDA improved in the quarter to levels similar to those seen just before the pandemic. The consumer business performance over this time reflects many factors, such as our market fairness agenda, including an upgrade to fiber for all copper customers living in a fiber area without any price or contract change. Our focus on customer experience, including the onshoring of all consumer call centers with our service levels, now recognized as industry-leading by Ofcom. Clearly, our decision in September 2020 to introduce even greater transparency for customers through annual contractual price rises across the majority of the consumer portfolio. Strong performance is also evidenced both by our churn, which has remained near record lows, and by a significant improvement in our NPS when compared to pre-pandemic levels. We continue to focus on and deliver great value for money, with our broadband customers paying an average of just over GBP 1 a day, which is broadly flat with pre-pandemic levels, despite our mix towards ultra-fast products increasing. On mobile, average monthly usage has increased over 150%, while the cost to customers has fallen by 13%. Now, clearly, we recognize the pressures on household bills in this challenging economic climate, and we remain committed to doing all that we can, in particular, for vulnerable customers. We continually raise awareness of our social tariffs with Home Essentials, offering speeds of 40 Mbps at just GBP 15 per month, with pricing frozen this year. We currently have more customers than anybody else connected to social tariffs, and we are working with Ofcom and the government to further promote these options, leading the industry by example. Our second priority is to capitalize on our unrivaled assets in enterprise and global. Similar to consumer, at the volume end of our enterprise business, in SME and SOHO, we are encouraged to see both revenue and EBITDA growth, but we do continue to experience challenges with larger corporates in enterprise and with MNCs in global. Enterprise EBITDA margin declined by seven percentage points in quarter one year-on-year. This partly reflects market pressures, but also the full migration of an MVNO customer, and with quarter one last year benefiting from a strong performance in our emergency services network business, and also a one-off asset disposal. Turning to orders, these were mixed in enterprise. However, we are seeing traction increase in our global growth portfolio with the order book up year-on-year and growth products representing over half of this. We have a comprehensive plan to restore these businesses to growth by migrating customers to our next-generation solutions while driving out costs through digitalization, simplification, and the retirement of legacy networks and systems. The next priority for the BT Group is to make a strong return on our fiber investment in Openreach. This continues to make great progress as we fiber up the U.K., and Openreach had an extremely strong quarter. The build rate continues to accelerate ahead of our expectations, and we anticipate building fiber to 3.5 million premises this year. This puts us on target to have an FTTP footprint of over 10 million by the end of the year. This is a truly fantastic performance delivered despite pressures in the supply chain, a tighter labor market, and the impact of inflation. We remain comfortable with our GBP 250- 350 per premises build cost range. Our FTTP take-up has increased to 26%, also ahead of our expectations, with record quarterly net adds of over 300,000. This was up 15% on quarter four, accelerated by our Equinox pricing offer. We are pleased with the offer's success to date, which is ensuring that new or regrading customers are connected to our FTTP network where it is available. We also finalized our co-provision agreement with Sky in a long-term deal. Under the agreement, Sky engineers will do the majority of the final in-premises installation for their connections on the Openreach network. Taking all this together and looking at what others are doing in the market, we feel extremely positive about the economics of our fiber rollout. We're the fastest builder, the lowest cost builder, and have the most customers connecting to our network at an ever-accelerating rate. Consequently, we remain very confident of making a strong return on our massive investment. The fourth priority is to digitize, automate, and reskill to transform our cost base and improve productivity. In digital, we are laying the foundations for real business transformation, already evident in improved customer journeys, which have helped to drive NPS improvements across the group over the last year. In addition, we are insourcing a number of key activities and reducing our reliance on subcontracted labor, helping us deliver the final a billion of cost savings in our GBP 2.5 billion modernization program by the end of fiscal year 2025. Very importantly, in networks, for the ninth year running, we won RootMetrics' Best Network Award. As well as being the overall winner, this was actually our best performance to date as we came top in every single category measured, including reliability, accessibility, speed, data, calls, and texts. EE also earned 25 national RootScore awards out of a maximum of 28. Very importantly, again, in speed tests, EE's slowest median download speed across every U.K. nation was much faster than the fastest speed of any other operator. Now, this clearly underlines the success of our best converged network strategy, and we are well-placed to continue building on this as our 5G network now reaches over 55% of the U.K. population. Our networks kept the country connected during the pandemic and will continue to do so. We were disappointed that we couldn't reach agreement with the unions, but we have contingency plans in place to minimize disruption during tomorrow and Monday's strike action. The final priority is to make sure we optimize our capital allocation and business portfolio. To that end, I'm pleased we have received formal approval from the CMA to form a broadcasting joint venture between BT Sport and Eurosport U.K. in a really important and value-accretive partnership with Warner Bros. Discovery. While we're on the topic of sport, we were also pleased to renew the vast majority of our UEFA rights in the recent auction, ensuring we remain the home of this premium content until 2027. As ever, we demonstrated financial discipline in our approach, securing 27% more games while saving around GBP 100 million a year in rights costs. To conclude, despite the very obvious challenges of inflation and the economy, consumer and Openreach are performing well, more than offsetting pressures in enterprise and global. This underlines our confidence in our outlook for fiscal year 2023, which is to grow revenue, deliver at least GBP 7.9 billion of EBITDA, and generate between GBP 1.3 billion and GBP 1.5 billion of normalized free cash flow, while also keeping CapEx at around GBP 4.8 billion. With that, Ben, I'd like to open up to questions, please. Thank you so much. Everyone, your question and answer session will now begin. If you wish to ask a question, please click on the raise hand icon at the bottom of your screen. If you would like to withdraw the question, please click on the hand again. We have received our first question, which is coming from Akhil Dattani from JP Morgan. Akhil, please go ahead. Hi, Akhil. Could I ask two questions, please? The first one is on enterprise. I guess as we've gone through the reporting season so far, we've seen quite a few telcos disappoint on enterprise. We've had AT&T, Orange, and yourself. All report pretty weak trends. Could you just give us a bit of color on exactly what's going on? I mean, I guess in the mix, we're seeing managed services, I guess it's declining double digit, but I guess, you know, what's going on, and how should we extrapolate this as we think going forward? I guess just within that, you mentioned a one-off in the prior year comparator. Would you be able to just quantify that just so we know how much that has mattered to these trends? That's the first question. The second question is a bit of a shorter one, which is just if we look at Openreach, this quarter, Openreach's line numbers that we've seen this quarter, the total fiber connections has declined by just over 200,000. Could you help us understand what's driven that and how we should think about that, please? Thanks a lot. Sure. Well, Simon will give you the line situation Openreach in a minute. Let me on Enterprise, while we do this, let me give you a sort of overall answer, and actually then Simon maybe can reconcile the numbers for you once we're through, so we all get that. I've got Rob with me here as well, actually. Rob can give you a sense of what the future holds and what our plans are. Look, there's not one overall answer for Enterprise because as we said, I think at the last year full year results, you know, there's three or four different moving parts of Enterprise. Let's just do the good news first. In SOHO and SME, we're actually seeing encouraging signs. We're back in growth and the customer base is stable, and market shares are actually good. The market is softer than we would like, but that's the same in consumer, right? Nevertheless, we're performing quite well there. I think as you can imagine, as we invest heavily in the networks of the future, particularly mobile, for example, and the stuff I just talked about, that's gonna all go well. I think that sector actually is okay. Wholesale, Simon will give you a sense of what's happened on the exact numbers in a minute, is challenging. Nevertheless, it's a tough market right now. As market softens, the overall wholesale market is very, very competitive. The real challenge for us is in the sort of large corporate and public sector area, where there's a whole host of factors at play, which, as we said before, you know, the transition from basically legacy voice to new IP-based services is slower than we like and more painful than we would like. Look, Simon, do you wanna just reconcile the numbers? Maybe, Rob, do you wanna just give a sense of where we're heading on things? Yeah, sure. Again, if you take Q1 2022 versus Q1 2023, at the revenue line, something like 80% of the movement and at the EBITDA, probably about 60% is due to three things really. The first is the run-off of the Virgin MVNO, which we you know about. The second is the one-off that we described, which was a small monetization deal on some infrastructure. And the third actually is that ESN had a very strong quarter in Q1 2022, and the revenue and margin flow through into Q1 this year is somewhat lower. Those three, as I said, is something like 80% of the year-on-year revenue drop and almost 60% of the EBITDA. Really the third one, third driver, you know, of the performance year-on-year is the one that we called out in the release and you'd mentioned, which is, you know, the large corporate market is challenging. That combined with sort of legacy product portfolio in there, which is typically high-margin, is giving us year-on-year headwind. Those are the main drivers. Volume end of the business is performing well. Some of our new ventures are performing well. That's it from a financial perspective. Great. Thank you. Just while we're on that, the large corporate and then Rob can speak in as well. I think, you know, you mentioned some other people. I think, you know, it is clear that in that large area, our customers are hesitating to spend as much as we would like. There's no question about it. Whether it's large international customers in the global area or in Rob's area within Enterprise, the market is softer than we would like. That's for the reasons that I think we've gone through before, right? I'll let Rob give his perspective on what we're doing about it. Yeah, I think just to build on those themes. I think you see that we view the business really as a collection of three businesses. There's the volume SOHO SME, let's call it for simplicity's sake, a third. There's wholesale, a third, and there's corporate public sector, a third. SOHO SME, yeah, we've got revenue growth, we've got EBITDA growth, we've got customer growth across all the key metrics. You'll see that in the Q1 KPIs, IP Voice, retail broadband in that sector and mobile. We've put a new segmentation strategy in place. We formed a separate SOHO team. We've refreshed the portfolio. The NPS has improved a lot. There is still quite a lot of self-help left in that segment, I believe. You'll see some new product announcements coming shortly. We're doing a lot of work on distribution to make sure that's fit for purpose, especially in SME. Digital is really undeveloped in BT. We have less than 5% of our inflow coming online, so that's a big opportunity for us. You know, there it's really about consolidating the wins, improving distribution portfolio. Against that, of course, there are gonna be some macro headwinds, but that will affect the sector as a whole. Wholesale is largely about lapping now the big MVNO loss. Again, you can see in the metrics we've got around about GBP 50 million of revenue for the quarter. We had about GBP 180 million in the prior year. That gives you know, a sense of the challenge we will have to go through for the rest of the year before we get to the other side of that. We have got some new wins in the MVNO space, Tango, plan.com. We've done some re-signs, but these are much smaller, you know, compared to the existing one. I think the second issue in wholesale, which was touched on, is that there's definitely margin compression, particularly in the fixed side of the business. There is a big focus on, you know, cost control and also expanding our share of the communication providers themselves. Finally, to Philip's point around corporate and public sector, you know, there we are refreshing the strategy. We put a new management team in place. We've got a new leader of the business. We announced this week the consolidation of distribution to Great England as a new sub-region in corporate and public sector. We formed Division X, and we're investing GBP 100 million in that over the next three years. That's all about solution selling into the large corporates, both public and private sector. There are some green shoots emerging. We've got a big new transaction we announced, Sellafield. We've got a new 5G win in Port of Tyne. I think the story is there that we have a better way of running the business. Against that we've got a bit of weakness in the macro and demand, as Philip said, and we do have to get to the other side of the migration from legacy to new, which is quite painful from a margin perspective. Final point I would make is efficiency, cost transformation of our IT estate, retiring of legacy applications and solutions is a big theme in the business. There's a lot we can do to be more efficient and to pull that cost control through. I hope that helps everybody on Enterprise. The only thing I'd add to say that Rob has got his arms around this, the beast that is Enterprise, right? The amount of heavy lifting required to improve the guts of the business that allows us to do the kind of things he's talked about is making a lot of progress. You'll never see that, but trust me, all this investment is going to digital and IT and improving stuff for our customers is happening. The green shoots that Rob's referring to, you know, we can begin to see. We've mentioned a couple here. It's gonna take time, but we have got a clear plan. Next question, please. Thank you. Our second question comes from Polo Tang from UBS. Please proceed. Two, the first one is really just about your guidance. So you've kept guidance unchanged, but can you maybe just talk about what you see as the main upside and downside risks, in terms of estimates from here? My second question is really just about consumer. Can you maybe talk about what you're seeing in terms of competitive dynamics? Specifically, do you think the good growth that you've seen in Q1 can continue? I'm just asking the question because it looks as if promotional intensity has returned with Virgin Media lowering its promotional prices on broadband and Vodafone getting more promotional on mobile. Thanks. Yeah, Polo Tang, two important questions. I'll let Simon Lowth give you his perspective on the guidance as well. I mean, you know, we said for some time, return to growth, you know, GBP 7.9 billion EBITDA, I think we feel really good about that. I hope that people recognize there have been a lot of changes over the last, I guess, 20 months since we first mentioned the GBP 7.9 billion EBITDA, and we're still on track despite the obvious challenges on inflation, economic uncertainty, and all the questions that people have about. It's only one quarter, but that GBP 7.9 billion EBITDA is as solid as it ever can be. Clearly there are other things going on below that in terms of cost pressures, inflation, energy. I can't tell you more than that Simon and his team are all over those cost lines, making sure we're doing everything to mitigate the impacts of inflation. You'd expect us to have made a number of different assumptions. Our guidance is our guidance. Do you wanna say anything else on that? I mean, I think. Specific cash flow. I mean, the specifics are Consumer and Openreach are clearly performing extremely strongly in the market and with our cost. You know, we feel you know, really good about the progress of those businesses. I mean, Rob's already talked about the challenges we face in some elements of Enterprise and Global, but they are being more than compensated, as you can see, by strengths in Consumer and Openreach. I think the only other thing I'd say is, you know, we got off to a really flying start in terms of the year, in terms of our CapEx build in Openreach, FTTP, and build, and indeed the take-up are actually ahead of our expectations. You'll have seen that, and you know, in the CapEx number. I guess the one thing that could see some upside for us, in one sense, is faster rollout, faster provisioning onto FTTP, and we'll need to manage that at the CapEx line, which we'll do within our cash flow range as we've described. Key point, that, Polo Tang. I mean, we know we've built more than we expected on fiber, and the demand is higher than we expected, which is really encouraging. Just on the consumer question, this is again, another really important point. Look, the key thing here is both Openreach and Consumer have real momentum now, right? That's not gonna change suddenly. What we need to do is watch the market really carefully, watch the macro climate really carefully and compete like fury. We're always doing that. You can tell in our numbers, and you can tell in our narrative that it's the overall story. It's not just about, you know, pricing, for example, although clearly the pricing is so important. I repeat, the net promoter score, the customer metrics, the satisfaction, the churn, they are at best ever levels, and our value for money scores are excellent. Of course it's competitive. The market is always very challenging. Yes, we note the promotional activity. We're not in the business of losing customers. We will not lose customers. Will there be the odd quarter here and there where things happen that we would prefer not to happen? Of course. In the end, we believe rational thinking will prevail. you know, given the situation we find ourselves in right now, of course, it's challenging to put your prices up in the way that we have, but we have to because we're seeing inflation on our end and in order to fund the investment and make sure our customers get the better stuff on the other side of fiber and 5G, we have to keep delivering value for money in the way we are, and that means that we can put our prices up because the value for money scores are great. Thanks, Polo Tang. Our next question comes from Nick Lyall from Société Générale. Nick, please go ahead. Hi, Nick. It was just a quick one firstly to come back to enterprise. On the enterprise costs, it looks as if the costs are up reasonably sharply versus some of the other divisions. Given you're losing some low-margin revenues on things like large corporate, I wondered why that was the case. Could Rob maybe mention whether there's any issue on costs? Does that give him an opportunity to reduce costs a little bit again later in the year as well? The second thing, do you mind just clarifying on the fiber rollout. I think you said GDP 4 million last quarter for Openreach. It seems to be GDP 3.5 million now. Did I just misunderstand that last quarter, or has that come back a little bit? I'll do Openreach, then Rob can do your enterprise question. No. We built just over three-quarters of a million in the quarter, and we are aiming to deliver about GDP 3.5 million build compared to 2.6 last year. Okay? Was that four before, though, Philip? 'Cause I think last quarter you were talking about four. I just wondered if there was any change because of some issues on provisioning or. No. We're accelerating what we're building ahead of what we expected. I mean, if you look at the quarters, the quarter one, quarter four was already the biggest quarter. Quarter one was a very big number. Okay. Up 15%. Enterprise costs, Rob has a really good answer to this question. Go on, Rob. No, the most significant driver of the cost increase is the Openreach input costs, which are obviously indexing. I think for the rest, you know, things are generally under control. I think the real opportunity in the longer term is as we move to more, you know, digitalization, modern IT, we have more opportunity for structural cost reductions. Right now, we're really just absorbing the inflationary costs and where possible, you know, moving them on to particularly the volume part of the market through our indexation. Right. Great. Thanks, Rob. Our next question comes from David Wright from Bank of America. Hi, Dave. Please go ahead. Hello. Thank you, guys. Yeah, a couple of questions. Just firstly, this might be my own sort of failing, but I'm struggling to basically equate what VMO2 has reported in revenues versus what you've reported. Their quarter-on-quarter revenue growth improvement is 30 basis points and in fixed and mobile, you guys have done like 10 percentage points. I don't get that. I guess what's also quite interesting, though, is maybe back to Akhil first question, just on the line loss dynamic. If I sort of present a hypothesis, and please just tell me where I'm wrong here, but is there a risk that they've maybe been a little softer with some of their price rises, you guys have been quite firm, that you could be losing some market share loss here and maybe you've gone a little hard given the macro pressures? That's just something that I'm happy for you guys to just come back and tell me where I'm totally wrong there. Then just on my second question, given inflation now on the CapEx line, and obviously you guys are building so rapidly and impressively, but it's gonna be hard to really offset that. I think in the last quarter, Philip, you said that you pretty well, you know, exploited all of the the efficiencies in fiber build at the moment. I assume that you guys would not want to slow down fiber build just to manage that guidance. You know, should we be thinking that it's hard not to avoid the low end of that, admittedly, while still in the range? Thank you, gentlemen. Why don't I do the last and then Simon can have a go at the sort of VMO2 comparison, however he best wants to do that. On the fiber build, again, I would say this, clearly there are lots of inflationary pressures on everything. I think you should be, like we are, hugely encouraged that we feel very comfortable with our GBP 250- 350 build rate. You're also right to say we're not gonna slow our build. That's what we said today, we're accelerating our build, continue to do that. There are increasing costs. We are seeing inflation across the board, but we are also making efficiencies and you can then calculate that had we not had all those huge inflationary pressures, we might have reduced further the costs. What I'm saying to you is the team at Openreach continue to drive efficiencies. We feel very comfortable with the envelope we've articulated before, but we are offsetting through those efficiencies some of the inflationary headwinds that we get. I just give you the other key point. The scale at which we're building makes a massive difference to the cost. Having built up this capability, you know, in the last quarter, we've built a huge spine in Openreach, loads of work in progress, etc. That sets us up really nicely. The machine is working, and as I said before on consumer, the momentum in Openreach is really pleasing 'cause it takes time to build that capability. That scale delivers fantastic benefits, not just in the future, but right now too. Simon, do you wanna just give your view on the VMO2 comparison? I'm not quite sure how we do that, but. Yeah, I mean, I'm not gonna comment on, you know, the drivers in another player's. I will comment on the drivers in our performance. Our consumer business, which I think is where you're focused, clearly had a very strong quarter. That is very much as we had expected and built into our expectations for the year. Let's be clear, we're holding broadly our base of loyal customers. Our churn is very low. We're putting through index price rises. But in addition, in some areas, we're getting an upgrade in terms of the product that customers are purchasing. For example, the rapid uptake of FTTP. We've got strong ARPU momentum on a, you know, broadly constant base, and continued efforts to drive the costs down, and that formula drives very strong EBITDA performance. That's in the consumer business. You asked, I think, about Openreach, and I want to go back to Akhil's second question, which he snuck in a second question, which we didn't get to, but I'll, as a special bonus, I'll answer it. Which is, yes, we have seen some line loss in Openreach, that broadly in line with sort of historic trend. We have obviously got the continued drag of of sort of enterprise lines rolling off where enterprise customers got surplus lines. We actually had a pretty significant cease actually of about 70,000 customers in the quarter, which was a deferral from last year. That contributed into this quarter. We also did see a bit of a pull forward actually of connectivity, particularly into broadband during the pandemic, and we think that's eased off. This is conversion from voice-only onto broadband. We haven't seen in that performance any meaningful uptick in loss of share to Altnet or indeed to Virgin. It's a continuation of the trends we've seen. Thank you. David, can I add one other thing while I just jumped on that, on that question? Remember, you know, 2.5-3 years ago, we corrected the value equation in consumer. Remember the technology gap, copper fiber, front book, back book, fairness. We equalized everything and made sure that the whole customer base was in the right place. Clearly, we haven't solved the whole front book, back book thing, but we've much reduced it and the challenge now is just to keep going along the tracks we're on. I'm not so sure everybody else has the same sort of profile that we do. So again, that's for you to think about, but we're really pleased. In Mark's area, he's done a fantastic job of delivering across the different segments for our different customers. When we look at the price increases that have gone through, you can tell, A, they've stuck, and B, we haven't lost many customers, so the churn is at record lows. That's a really encouraging sign. No complacency, though. Can I just remind everyone? Thank you very much. Can I just remind everyone to keep it to one question each, please? We've only got another 25 minutes. We've got a lot of people to get through. Ben, if we go to the next question, please. Certainly. Thank you. Our following question comes from Sam McHugh from Exane BNP. Sam, please go ahead. Hi, Sam. Allocated in August for these 5 million rural homes. I guess strategically it's super important for you to win these, given the asymmetrical downside risk if you don't win them. Two things. How should we think about the CapEx associated with those homes within the GBP 5 billion peak CapEx? Do you have something in mind in terms of your expectations for how many of those households you won't be the provider in the long term? Very cheeky second one just on broadband net add momentum in Openreach. Do you think it can get back to positive in the next quarter? Thanks. Sorry, Mark. Sam, I missed the first part of your question, but I think we got the gist of it about rural homes. I think you may have repeated the fact that we built 2.5 million rural homes in the 8 million, which obviously is a very big and important number. Economically, they fit within GBP 250-350. Clearly, a commercial rural is going to be slightly more expensive than a city center. Again, my earlier point is, one of the reasons we decided to do it the way we have, and Clive done, again, a superb job here, which is get scale and capability in rural, get the cost down, build like fury. That's what we're doing. Again, slightly ahead of expectations. Pleased with that. By the way, the subsidy for any rural is paid for by government. The super rural areas, which is known as the Project Gigabit, which so far has not gathered much pace, that's the situation for the government to fund, and we're in the process of bidding for some of those things as and when we can. The rural picture for us is really, really encouraging. I got the back end of your question. Not many people building there. Thank you. Our next question comes from Andrew Lee from Goldman Sachs. Andrew, please go ahead. Yeah, good morning, everyone. Hopefully you can hear me. I had a question on wholesale fiber share loss. Obviously, we all noticed your share price take a hit last Friday on the VMO2 TalkTalk deal. Be great if we could get your puts and takes around the risk of TalkTalk being bought by a network-owning competitor like VMO2, as the press has speculated, or more broadly, if you could just talk about how the overbuild risk of your network has progressed, you know, over the last six months, and how you see it progressing. Are you seeing more or less risk from share loss in that space? Thank you. Yeah. Again, look, I think we've always, you know, assumed over the sort of 10, 15 years of this fiber build that, you know, there'll be some losses over time, right? So in our investment case, we made a set of assumptions around that. I guess the real answer here is the economics of this investment decision, you know, when we took it, you know, had a sort of wide fan of outcomes, obviously. The risk profile was significant. That has dramatically changed in the last two years. The fact that we'll have 10 million homes built in less than a year is crucial in terms of determining how we get a return. That's why we said today, and I said in my prepared comments, we feel very confident about making a fair return and a very good return on our FTTP investment. That's not in doubt anymore. The question is, you know, can we get to the higher end of the range? I think there are lots of situations where we do. You know, if hypothetically TalkTalk were with somebody else, like the piece, favor you mentioned, of course, we'd lose some lines. Of course, that might knock off some cream of the FTTP case, but it doesn't touch the fundamentals of it at all. The returns, by definition, will be strong, because you can imagine, under all scenarios, that TalkTalk business will always have a big chunk of their activity with us for obvious reasons. Look, we're not worried about it. Obviously, we'd prefer it to stay where we get the majority, the vast majority of TalkTalk's business, but we can't be complacent. It's a competitive market out there. We've taken into account all the different dynamics. On your overbuild point, right now, there's a lot of building going out there, not that much connecting. The following question comes from John Karidis from Numis. John, please go ahead. Thank you very much. Good morning. Actually, in a sense, you sort of answered the question at the end, but maybe you can enlarge upon this. I'm trying to understand, are you seeing any material evidence of alternative operators slowing down their build-out? Are you seeing anyone saying, "Ooh, I haven't got the money. I need to either slow down or exit"? Or is the opposite happening at this stage? If you feel you've answered that question, I'd love to know the difference, how significant you think the difference of opinion is between your good selves and the CWU. Is it something that can be bridged, or will this thing run and run? John, I mean, the short answer to your question is no, there is no material evidence of that. I'll tell you what there is material evidence of is everyone realizing that there's gonna be a lot of trouble for some of the alt nets. What I mean by that is if you add up everyone's ambition, their stated aims, the amount of money that's been raised, it is clear a lot of people won't make it. What I'm seeing now is clear evidence of people saying, "Is it me who's not gonna make it?" We can see that in the market, and that's because it's a competitive market, right? Actually, of course, you know, we are mobilizing the whole of BT Openreach's weight to build in the way I described, and we're connecting, you know, customers at a massive rate, okay? Obviously that's hugely encouraging for us. I understand that's not encouraging for some other people who are competing against us. Inevitably, they're all looking and saying, "How are we going to compete with this, massive migration to full fiber that Openreach is driving for the benefit of our customers and the benefit of the country, particularly building in rural areas too?" I suspect over the coming months, reality has to dawn on people, and they have to work out what does that mean, because there is no chance that all the people who are building will be successful, and there's every chance that many will fail. The question is who will fail and when? That needs to happen so that we can get on with connecting customers, and building in an economic fashion and not having CapEx as waste, because that's not in anyone's advantage. Can we get the next question, please? Next question comes from Mandeep Singh from Redburn. Please proceed. Can you hear me, please? Yeah, we can hear you. Okay, thank you. I just wanna come back to the fiber overbuild and so on. Obviously, you've said what you've said. Fixed Wireless Access seems to be a growing development in some markets, particularly in the U.S. I appreciate there's a price differential in terms of the ARPU they're trying to target. Is there any evidence that in an economically more challenged environment, people are trying to go more mobile only? Do you see any trends there that one needs to be aware of, and whether Fixed Wireless Access is something that you would be using more of going forward? Thanks. It's a good question. Gotta keep your eyes on these kinda things, but the short answer is absolutely no. Right, that's because the value for money for fiber is what I said before. Fixed Wireless Access, while a very important product in certain places, and it will happen in certain rurals, and mobile also, will also use in the ultra rural, you know, OneWeb, we will be doing stuff with them. These are not answers at scale in volume across large swathes of the country. And the economics and value for money of our fiber proposition is so powerful. Of course, we watch it, but the answer is no. Today. Next up is Robert Grindle from Deutsche Bank. Please go ahead. Yeah. Hi, can you hear me okay? Yes, Robert, we can hear you. Good morning. Thanks. A point of clarity on the GDP 70,000 fee forward Openreach, please. What is that more specifically? Was that a roll-up of fees of an ISP losing share or migrating customers to another provider? By way of follow-up on public sector, does the current leadership process in government impact here, so Q2 will stay soft, or is that irrelevant on the day-to-day basis and it's certainly more of a macro uncertainty thing affecting enterprise? Thanks. Simon, do you wanna just take that one? Yeah. To Yeah. To clarify, the thesis is 17, not 70. It is 17. It's simply a deferral of some thesis that flow through from Q4 last year. It's simply a timing matter, Robert. That's all, and it's 17. They were bad debt customers that were being ceased. Got it. On your public sector point, Rob, why don't you give your perspective on the public sector? Yeah, I would say two things. For existing contracts where there are delays in, you know, re-tendering, generally that is more positive in the short term, because you know, we stay on legacy a bit longer. There are some big RFPs out there that are partially delayed, but generally if they were awarded, that's only really gonna be affecting revenues in the next fiscal. Some delays, but I don't think it's negative in the kind of one or two quarters out, which I think was the heart of your question. Great. Okay. Next question, please. Next up is Georgios Ierodiaconou from Citi. Please proceed. Hiya. The pricing, and clearly some of your other competitors have also reported very low levels of churn despite the adjustment on the CPI that came into effect a few months ago. I'm just interested to hear from you how you're thinking about your front book pricing and how it will evolve in your view over the next year? I appreciate these terms give you a boost to revenue, but clearly unless the front book moves higher, this effect may be one or two year effect, but not last much longer. Just curious to hear how you are thinking about evolving front book prices? Thank you. Yeah, look, it's a good point. As prices go up in the way that they are, and the front book promotional market, competitive market continues to operate in the way it does, you know, there is that question mark of what are the implications and how does that work. Again, all I can tell you is the way we segment the market, the way we price and the way we respond to competition is very well organized. We peg to certain types of people, certain types of activity, not in a broad fashion, but depending on a whole range of criteria and features. Whatever happens in that market, you know, BT Group will maintain its market share in the places that we want to. It's because of our size and because of our current scale, you know, we watch that very, very carefully. You're right to raise it as a potential challenge, but I would tell you with our plans going forward as we continue to bring out new exciting propositions and new things that differentiate us, and, you know, we talk about what percentage of people are on Halo, for example, it's a very high number, and those people have enriched offers that give us a very strong competitive situation, which is one of the reasons that churn is so low. We do need to be very cognizant of how the front book evolves over the next six months. It's, of course we do. Following question comes from Carl Murdock-Smith from Berenberg. Carl, please go ahead. Hi. Thank you very much for the question. Given what's happening tomorrow and on Monday, I think it'd be slightly remiss of us as an investment community if we didn't ask about it. In preparation for those strikes, can you add some additional commentary in terms of how you've prepared for those and what kind of operational and financial impact, if any, you expect? Thank you. Yeah, no. Look, I really appreciate the question. Of course, it's. You're right. It'd be remiss of us not to talk on this call given the significance of it. Again, a couple of thoughts before I answer the specifics. I have to say, I think the situation is extremely sad. You know, we're really disappointed to find ourselves in a situation of which of course we have to take our share of the responsibility for it. It is important just to dwell on the facts a minute before I give you the answer the question. You know, we have put forward a pay increase that we execute in April, which is an average of 5% for our frontline staff, with a range of 3%-8%. More than half get more than 5%. You know, we feel strongly it's fair, it's reasonable. Clearly, we can afford it and still hit all the other targets and metrics and stakeholder requirements that we have. We think it compares extremely well with any comparable company you can pick, including our regulator. That did 3%, by the way. You know, we've got to make sure that we feel like as a management team, a leadership team, and I'm talking about the top 800+ the board, we feel like we've done everything we possibly can to help our people who are facing economic squeezes like they've not seen in a generation. That is a really important point when everyone talks about this, number one. Number two, we will always talk to our partners in the CWU. We actually have a very good relationship. Clearly, things are very heightened at the moment, but we're always open to dialogue. My door's always open. We'll always talk about any subject. The thing we've got to do here now is we've got to move on and move forward, right? That's what we've been doing. Moving forward is unfortunately having to plan for strikes where nobody wins. I know no one wins from this strike. You know, our colleagues are not gonna get paid when they're striking. Clearly, it's gonna impact the business in some shape or form. To get to the heart of your question, we are prepared for this enormously by definition. We have got a lot of experience with it, given the pandemic. Clearly in the pandemic, we had a lot of unforecastable changes in our labor scheduling and attendance, and we did things, you know, in very short periods of time and responded, I think, extremely well. Actually, everyone knows, you know, we managed to deliver exceptionally well in those difficult circumstances. These are not quite the same, but they're not dissimilar. You know, we really appreciate the union carving out the 999 calls. We thank them for that because we answer about, you know, you know, 4 million a month. That's 1 million a week. That, that's not gonna be affected. There are a big chunk of call centers, by the way, that are EE, who are not going out on strike. We think that, yes, there'll be a bit of extra call waiting time. Yes, we'll have to delay a few appointments for repairs and when technical issues happen. We actually think I'm pretty confident that we'll be able to manage through, albeit we expect the odd surprise here and there. Look, again, really well prepared for tomorrow and Monday. Our people, even those people who are going out on strike, I really appreciate they do care about their customers, and they don't wanna put them through bad things 'cause they understand the implications of that. We're well prepared. There's gonna be some impact. We think it will be manageable, but we expect the odd surprise along the way that we haven't anticipated. The next question comes from Jakob Bluestone from Credit Suisse. Jakob, please go ahead. To come back on enterprise, can you just give us a bit of a sense if this is the low point for EBITDA? I mean, the sort of GBP 315 million of EBITDA you reported would annualize to about sort of GBP 1.3 billion per annum. Consensus is about GBP 1.5 billion. Can you just give us a sense, is this the low point for EBITDA, or does it actually come down further as the economy weakens? Thank you. I'll let Simon and Rob chip in. Look, you know, the thing we're doing here is we're grappling with this transition that everyone knows about, and we're gonna do it really properly, whatever it takes. Rob is leading the exercise, and I mentioned it before, real heavy lifting, moving from legacy to new and developing, frankly, you know, a lot of new stuff that our customers need and investing at the same time. You know, what Rob mentioned, we've got change in management in the place where we've had the most challenging situation, but we're also investing in people and resource as well as taking costs out. There's a lot of good costs coming out, which are improving customer journeys, but there's also costs going in. Rob has to balance those things, to make sure that we create enterprise in a future state which is competitive and can grow sustainably. I mean, Simon, Rob, do you wanna comment on that? Headline is, I mean, we would expect to, and do expect to, you know, move EBITDA forward from this quarter. Remember, the MVNO is now largely rolled out. We've got some momentum in the volume part of the business, continued drive on cost reduction, and the teams in Wholesale and CPS work incredibly hard to just convert the pipeline, drive the new product set forward. Rob, anything you wanna add? I think the 315 in Q1, we believe we can build off that base in absolute terms, yes. Yep. Good. Thanks. Thank you. Thanks, guys. Next question, please. The following question comes from James Ratzer from New Street Research. James, please go ahead. Hi, James. Can you hear me okay? Hey, loud and clear, James. Great. Yeah, sorry, this is probably another one for Rob again. Enterprise, obviously the hot topic of the day. If I look at your trends and strip out what I call the kind of one-off impact from the loss of the Virgin MVNO, your revenue trends in the quarter were down 3.5%. That's actually better than what you were averaging last year. I'm intrigued why you kind of seem to be talking about a weakening macro environment. I mean, is there something underlying that, though, that you're seeing getting better? What is it that's getting worse at the top line and then at the bottom line, EBITDA, and I think Nick brought up this point, it does seem as if it's costs that cause the EBITDA weakness. Given, Rob, you mentioned that ties in with rising cost to Openreach, surely your other business competitors are seeing a similar phenomenon. Are you seeing a move within the enterprise segment to start shifting pricing more to CPI to therefore align with the cost base like we're seeing in consumer? Thank you. James, good question. Rob, you might as well take this. Yeah. I mean, we got good answers to that. Go on, James. Over. No, I think it's a fair analysis. We ran most of last year down around 5% on the sequential quarters. I think Simon said earlier that roughly half the absolute revenue decline is the MVNO loss. If you strip that out, it's sort of 3% or down, so it's improving trend. Consistent with what we said, that a third of the business is Soho and SME, which is in revenue and EBITDA growth in the quarter. Mm-hmm. Running a better business, self-help distribution, lower churn, better NPS, that's all on an improving trend. I think I would simply say that the macro outlook is probably weaker now than it was one or two or three quarters ago, and that affects everybody. On wholesale, we just got to lap Virgin and in corporate and public sector, definitely we've got a lot of work still to do to rebuild that business. I think in terms of the cost pressure. Yeah. That's gonna be across the industry. Certainly in the SOHO and SME segments, we have a significant proportion of that customer base that has indexation in their contracts, and we did put inflation indexation through, and we would expect to continue to do so in line with the terms of the contracts. Great. Thanks, Rob. Appreciate it. Good question. Appreciate it. Our next question comes from Jerry Dellis from Jefferies. Please go ahead. Hi, Gerry. You've got the last question. Be loud and clear. Great. Thank you, sir. Yes, another question on Enterprise, please. Rob, you mentioned that 315 of EBITDA in Q1 should be the bottom for the year and build off that. I think the Virgin MVNO drag is still pretty significant during Q2 and Q3. You've mentioned that there are a number of uncertainties, particularly related to public sector, and obviously the macro environment is not really within your control. When you talk about building off 315 in the balance of the year, you know, what's the shape of that and what are the elements that are sort of outside of your control? Just to get an idea of the potential risk to your expectations. Thank you. Rob can answer. We're not gonna give you a detailed forecast. Rob, give your perspective on to try and help Jerry a little bit. No. I think the important thing is that there are no Virgin MVNO revenues in the 315. Mm-hmm. It is a drag in the sense of a comparison when we get to Q2, Q3, Q4 of Q2, Q3, Q4 of the previous year. It is flushed out of the absolute numbers in the quarters. Yeah. You know, I think that's point number one. I think point number two is, as I've said in a couple of the answers, we still see significant potential for self-help across the business. I think we've starting to demonstrate that we can deliver that in SOHO and SME, and we've got to push that through into, you know, the corporate and public sector. Better inflow, lower churn, more commercial control of pricing. We're putting a significant investment into Division X, which will yield results going. We do believe we can build the EBITDA off the Q1 base. Great. Thanks, Rob. Look, just to close off then, thanks so much, everybody, for your time, your questions, your interest in BT. I hope we've been able to give you some perspectives that helped you a little bit. Look, we've made a good start to the year. I'm pleased with it. Clearly, as you know, we've got ongoing challenges in Enterprise and Global. Openreach, Consumer are firing on all cylinders, and we are continuing to invest really heavily in the future, particularly on networks but also in IT and technology. Really confident we're gonna make a strong return on those investments. Customer satisfaction, churn, NPS, all those things look really encouraging. Obviously, we gotta manage through the next few days and weeks, but we're confident we've got the right plans in place for all our stakeholders. Appreciate your interest and support, and enjoy the rest of the summer. Thank you, everyone. That marks the end of your webinar. Thank you for joining, and please enjoy the rest of your day. Goodbye.