Strap in everyone, I hope you're ready for a new era of Plusnet. Massive value, massive plus, and this guy. Good morning and welcome, everyone, to BT Group's results presentation for the half year ended 30th of September 2026. Presenting today are Allison Kirkby, BT Group's Chief Executive, and Patricia Kobian, BT Group's CFO. Following the presentation, there will be a question and answer session. I would like to make everyone aware that this event is being recorded for replay purposes. Before we start, I'd like to draw your attention to the forward-looking statements caution in the presentation and press release 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 presentation can be found on our website. With that, I'll now hand over to Allison. Good morning, everyone, and a big warm welcome from us here at BT headquarters in London. And thank you for joining us for our half-year results for this fiscal year. I'll start by setting out the progress we've made so far this year, and then Patricia will update you on our transformation and our financials, and then we look forward to taking your questions at the end. After a quick recap from myself. I don't remember a busier period here at BT than this half, and I am pleased that throughout it all we are showing strong and disciplined progress against our strategy. Let me take you through a few of the highlights. We showed growth in total revenue for the first time in 2 and a half years, and we continue to grow EBITDA and customer satisfaction. We won historic double awards for the best full fibre and the best mobile networks, and Openreach has hit another record on fibre connections, adding its 10 millionth fibre customer during October and seeing lower broadband line losses as a result. We continue to win in what we all know is a super competitive market with more converged customers in consumer and a really strong order book in business. And we continue to accelerate our transformation now halfway to our £3.5 billion target, with a particular focus this year on PSTN switchover alongside all our other programmes. For international, we've announced a new partnership with Verizon to create a scaled global joint venture serving multinationals, and we've reached agreement with the BT Pension Scheme Trustee on the 2026 valuation in record time. Our issuance of bonds to replace future contributions will reduce the deficit to around £300 million. And finally, in unprecedented circumstances, we stepped up to buy TalkTalk out of administration. And while we await the regulatory review process to conclude, work has begun to stabilise it and to plan for it to create value for BT. As a result, we are today reconfirming all of our guidance metrics for the year and beyond, including our £2 billion target for normalised free cash flow this year— that's excluding the impact of the TalkTalk acquisition— and £3 billion in fiscal year '30. And our interim dividend is rising by 2%. As you all know, our ambition is to become the UK's most trusted connector of people, business, and society, guided by our purpose to connect for good. Our strategy focuses on 3 things: building the best, most trusted digital networks, connecting customers so they thrive as we grow in a digital world, and accelerating our modernisation to restore leadership in everything we do. We're now just over 2 years into what is a 6-year journey to create a fundamentally better BT by the end of this decade. And we're delivering. We're building the UK's much-needed and only nationwide digital backbone, and we're winning with customers, all enabled by a radically simpler and better company. All of this underpins our financial guidance, which are unchanged and which delivers growing cash flow with improving returns on capital. But let me take you through some more detail on the next slide on what we've achieved so far this year. On build, Openreach has now connected 10 million full fibre customers, with the 25 million coverage milestone well in sight. Our 5G+ coverage keeps expanding towards our 99% target for 2030. And we achieved a historic double award win for our networks. And we launched 5G network slicing, giving both consumers and businesses priority access when they need it. On connect, we relaunched the BT brand for homes and businesses with Behind Brilliant Things and new mobile, TV, and security products. And we also just last week refreshed the Plusnet brand. Our new product launches are closely allied with core connectivity, from AI receptionist and mission-boosted business, the loyalty programme EE OneUp in consumer, and Fastlane in both, commercialising and monetising our network slicing capabilities. Customer satisfaction also rose again across all retail brands, and we launched great products with our partners, including our new cybersecurity solution with Microsoft. And we're also the only UK provider to offer iPhone handoff and are participating in Anthropic's Project Glasswing. And finally, on Accelerate, Despite ongoing workforce and cost transformation, our colleague engagement continues to improve with an excellent understanding of our strategy and a stronger sense of mission and purpose. reported by our colleagues. We continue to simplify through the international joint venture to focus back on the UK, accelerating transformation in business and cutting units on legacy networks by half. With 1 million customers moving off the legacy analogue phone network in the last 6 months alone. We are scaling AI adoption and have a ServiceNow-powered programme for AI operations. And of course, we stepped up to protect service continuity for 2.5 million customers. by buying TalkTalk out of administration. Moving to the next slide, everything we do rests on our brilliant networks. Openreach has achieved a remarkable milestone. Having now connected its 10 millionth customer. Just 5 years ago, they only had connected 1 million. Openreach has moved at an exceptional pace in the fibre race and always on budget. And our retail brands in consumer and business are leading the way with over 600,000 full fibre net adds in the half year alone. Our quality has been recognised by Ookla, and EE became the first major UK provider to offer 8 gigabits per second speeds on advanced full fibre broadband. Using XGS-PON technology. In mobile, we won the UK's best network from RootMetrics for the 13th consecutive year, and we've developed Fastlane, the UK's first consumer network slicing solution. And I'm really pleased to say we continue to grow our postpaid base, up 86,500, the best in over 4 years. Moving on to the 3 customer-facing units, let's start with Openreach, where, as I said, we've now passed more than 24 million premises, well in sight of the 25 million target that we set back in May 2021. Connections have been surpassing our internal expectations, with a new record in the half, bringing us to 41% penetration. We have rightly prioritized satisfying that demand for connections with a slightly slower build as a result. On cost to build, and with only just over 3% of the £25 million to go, I can say that for the whole project we'll come out just above the middle of the £250 to £350 range per premise that we set ourselves 5 years ago, and that's despite inflation at more than 25% over that same period. That's around half the average cost of our competitors and a fantastic achievement by the team and obviously supports our ability and our desire to pass on this efficiency. in the offers we create for our communication providers so they can drive even further uptake on a better quality premium service. Our line losses were £175,000 in the quarter and over the half year were 11% lower than last year. As with last year, we will update our view on line losses with the Q3 results, taking into account the impact of the PSTN switchover in Q4, the effect of the TalkTalk acquisition, plus the market's natural variability from one quarter to another. In our operations, we met all Ofcom quality of service standards and maintained our excellent Trustpilot rating. Because fibre is naturally more reliable, repair volumes continue to decrease 16% year on year, and that combined with transformation initiatives is enabled ongoing headcount reduction. Together with top-line growth in broadband and Ethernet, our cost transformation enabled us to grow EBITDA by 4%. Moving now on to Consumer. We all know how competitive the UK market is, so it's great to report that we grew converged, mobile, and TV customers in the half with only a modest decline in broadband. And while we have the biggest converged base in the market, there is much more still to go for. We held service revenue flat even after a voice drag of 1 percentage point. And grew equipment revenue, achieving 2% revenue growth overall. Admittedly, there is some ARPU pressure in broadband, some of which is actually due to voice given the way we report and bundle, and some is from a competitive market. But as you've seen this half, we're able to drive value across all our services, while our transformation makes room for brand and other investments. We're also doing well in equipment, not just because of higher prices, but through deep partnerships for new device launches with all major handset suppliers. And in a constrained supply market, that makes a real difference. Helping us win with the highest value customers, driving better quality net adds and better ARPUs. On subscribers, we're winning by investing in all 3 of our retail brands, BT, EE, and Plusnet. I hope you like our new Pluso character. And in the half, we relaunched BT. Created the new EE OneUp loyalty programme, and last week we refreshed Plusnet too, which will benefit us in this coming half. And we're winning by leading with fibre, which now accounts for a remarkable 58% of our broadband base across the whole country, and that's over 70% in areas where Openreach has built fibre. NPS improved across all 3 brands as we continue to focus on brand and product innovation alongside improving customer experience, resulting in stable churn rates year on year. At relatively low levels across mobile and broadband. Consumer as a unit reached its best NPS level in 4 years, and Plusnet reached a record high as value for money becomes increasingly important for certain customer segments. AI is also starting to have a positive impact, making interactions more personalised and effortless, supporting our people with better knowledge, offers, coaching, and call summarisation. And we will work to ensure that in an agentic future, choice is about product and quality and not just about price. As we said at full year, we had higher brand marketing costs in the half, but we were able to offset those and also the cost of the voice migration through cost transformation. So we actually did better than we expected at EBITDA in the half. It's worth noting, considering some of the short-term headwinds we faced this year, the actual underlying momentum that we are seeing in consumer, specifically without the voice drag, EBITDA would have grown 1%, and excluding the additional voice migration costs to help in particular vulnerable customers switch over their PSTN, it would have grown 2%. Moving now to Business on slide 10, revenue in Business continues to be more stable than in the past, and that was the case in each of our 3 segments individually too, whether that be small and medium-sized businesses, corporate and public sector, and wholesale. Overall, we saw revenue and service revenue were down 1%, but both were up 1% excluding the voice drag. Within this, we continued to grow full fibre connections. They were up nearly 30%. A particular highlight of the half has been high double-digit order growth, with major wins and renewals across public and private sectors. That has included contracts with the likes of Scottish Water, Royal Mail, the Ministry of Justice, and the Cabinet Office. So as legacy runoff reduces, the benefit from this strong order book will be more visible in the future. Like in consumer, NPS improved, up 5 points, driven by continued improvements in service and especially in our corporate and public sector division. And consideration for the BT brand is also up on the back of our Behind Brilliant Things campaign and investment. And we also expanded our AI and security capabilities, including AI receptionists from BT and a deepened Microsoft partnership launching a new managed cybersecurity service. for UK organizations. All these capabilities strengthen our role in supporting the UK's mission-critical organizations and national resilience as the most trusted connector. As we said at the full year, EBITDA was expected to be lower in the first half due to migrations from legacy products and, of course, the higher marketing costs associated with the BT brand relaunch. But it is expected to improve in the second half. Now moving to international. As you're well aware, at the end of June, we announced our intention to create a 50/50 joint venture with Verizon through the combination of our respective international operations. Which will trigger a payment of $625 million in equalization payment to BT at closing of the transaction, which we continue to expect. in the second half of calendar 2027, following regulatory approvals. The new joint venture will serve more than 3,000 customers across more than 180 countries, representing approximately $4 billion in combined annual revenue. And while BT International has to now be treated as discontinued in our financial accounts, we continue to focus on making it better. Under Clive Selly since the 1st of April and now Martijn Blanken since the 5th of October, who, as you know, will be the incoming CEO when we create the JV. EBITDA was up £24 million on a like-for-like basis, enabled by excellent cost discipline and transformation, and so we are confident the cash outflow from International will improve from around £150 million last year to around £50 million in this fiscal year. So while we plan for the future, we're also seeing underlying business momentum improve. For example, we're onboarding customers, including Atos now, to our global Fabric Network as a Service. We're adding AI and security capabilities, and we secured contract extensions from Eurocontrol and AIA, to name a couple. Now moving to the next transaction during the period, and that was TalkTalk. TalkTalk had been in a sale process for a long time, and it became apparent to their board that in the absence of a viable offer, they would need to move to liquidation. This would have ended service for 2.5 million customers, including thousands of vulnerable customers, hospitals, and even the traffic light systems in large cities like Belfast. By stepping in, we have been able to protect service, aiming to stabilise and then quickly integrate the business once we have the approvals to do so. The cost of the acquisition is around £400 million in this fiscal year, and this comprises a combination of consideration, transaction, and administration costs. Working capital impacts, as well as a trading loss for the balance of this fiscal year and non-receipt of around £100 million that would otherwise have been due to Openreach. TalkTalk will appear as a separate reportable segment in our accounts, and we will update you later this fiscal year on revenue, EBITDA, and CapEx following alignment of their financial reporting to BT's accounting policies. Of course, we're awaiting the conclusion of the regulatory review before we can do that. And with that, let me welcome Patricia, to what unexpectedly is already her second time speaking to you following our call when we acquired TalkTalk on the 5th of October, in only her 5th week in the seat. as CFO. Thank you, Allison. It is great to be here, and yes, 2 months into my role, I have already experienced what BT can deliver at pace, and that gives me lots of confidence for the future. I will start with our transformation programme before also giving you more detail on our pension triennial outturn and the divisional performance. On transformation, we continue to deliver on the programme initiated in April 2024, which was extended in May this year to run for the 6 years to the end of FY30. The only change in this half year is that we are re-presenting the programme, given International is now treated as a discontinued operation for accounting purposes. That way, we can align the programme benefits and costs to our accounting, including the restructuring costs. In the half year, we delivered £312 million of gross annualised cost savings on this new basis, at a cost to achieve of £85 million. Taking the re-presented cumulative total to £1.7 billion at a cost to achieve of £800 million for the last 2.5 years. As you know, this transformation programme is a multifaceted one, which includes decommissioning legacy networks, simplifying our product set, scaling to fewer shared platforms, and deepening our data and AI capabilities. As a result, we reduced energy usage by 7% year on year, total labour resource by 11%, and Openreach reduced repair volumes by an 18% excellent 16%. We migrated 1.1 million customers off the PSTN in the half year, leaving just 1 million to go before the deadline in January 2027. And a final point to note, our FY30 total labour resource target has also been re-presented to exclude international, reducing from 75,000 to 80,000. to 65,000 to 70,000. Now, total labour resource is below 100,000 for the first time in our history, and this is 90,000 excluding international across both direct labour and subcontractors. Let's turn to the successful conclusion of our pension triennial review. I am pleased that we have been able to agree the 2026 triennial in record time, as Allison said, with a consistent approach for closing the deficit. As you can see, the deficit has continued to reduce. We have seen a low volatility of outcome at each valuation, reflecting our longstanding hedging programme covering rates, inflation, and longevity. We were behind plan in 2026, mainly due to increased longevity and some asset performance. As a result, we will make an additional payment in FY34 with a present value of £282 million. We have also agreed to convert our payments into zero-coupon bonds, giving the pension trustees even greater certainty. After the issue of these bonds, which we expect to take place very shortly, the deficit will fall to around £0.3 billion. And there is no change to the tax consequences. In time, if funds are not returned to us but are paid into the pension fund, we will obtain a tax deduction. The new agreement also makes several other changes, including having greater freedom to declare a dividend or other distribution of up to £1.5 billion a year. Which is double what had been agreed at the start of the last triennial, and that is rising to £2 billion by FY30. And also reducing trustee discretion on returning contributions to us. In return, we are giving the pension fund a charge over £4 billion of EE assets, and we have agreed a mechanism to close any deficit that reopens from 2029. So, in summary, this is a well-balanced plan supporting the pension scheme in line with our capital allocation policy, and no more contributions are expected to be required for the BTPS to reach full funding. By 2030. Let's move to our financial results. And let's start with Openreach. Openreach revenue grew 1% year on year to £3.2 billion. Inflation-linked price rises and an increasing FTTP mix in broadband were offset by the lower broadband customer base. Openreach EBITDA again grew ahead of revenue, up 4% to £2.2 billion, driven by ongoing cost transformation, including lower repair volumes, and lower labor resource. In Consumer, service revenue was flat at £3.9 billion and up 1%, excluding the impact of voice. Broadband ARPU fell, partly due to voice, but postpaid mobile ARPU grew. We will continue to compete to defend and grow our customer base in a competitive market. And Consumer total revenue rose by 2%, driven by higher handset prices, with equipment revenue up 12% in the half. Consumer EBITDA fell by 1% to £1.3 billion, a little better than we had signalled in May, as our transformation programmes and tight cost controls successfully mitigated much of the cost of the BT brand relaunch and other cost inflation. Moving to Business, service revenue was £2.3 billion, down 1%, but up 1% excluding voice. Business total revenue fell by 1% to £2.6 billion, with equipment revenues up 3% in the period. Business EBITDA was down 7% to £601 million due to the migration from legacy products and the higher marketing costs associated with the BT brand relaunch. And as we said in May, and as Allison has just mentioned, we expect a better performance in H2. Moving to results for the group as a whole. First half total revenue grew by 1% to £8.75 billion, supported by higher-priced equipment sales. The first half UK service revenue was £7.7 billion, down 1% after a drag of about a percentage point from voice. Note that internal revenues rose 3%, principally as Consumer was successful in holding its broadband base and growing fibre. As a result of our cost transformation programmes, supported by tight spend controls, EBITDA grew 1% to £4.1 billion. And reported CapEx fell by 5% to £2.3 billion as we have passed the peak of the full fibre build. Partly offset by very strong customer connections in Openreach. Cash CapEx was over £200 million higher than reported CapEx due to the timing of capital credit payments. This will fall in H2, and for FY28, we expect cash CapEx of just under the H2 run rate. Normalised free cash flow was £236 million for the half. This was around £300 million lower than last year on a continuing operating basis due to the timing effect of the Ofcom decision on the broadband anchor price. Receivables timing, which was not TalkTalk-related, and repayment of working capital financing. We remain confident in our outlook for circa £2 billion in the full year. And as Allison just announced, our interim dividend is up 2% year-on-year to 2.5 pence per share, in line with our policy of paying 30% of the previous year's full-year dividend. The IAS 19 pension deficit fell to £3.2 billion from £4.2 billion at the FY26 year-end, predominantly as a result of the payment of scheduled contributions over the period. As you know, the IAS 19 deficit does not drive our cash contributions and is calculated on a different basis. The cash contributions are determined by the actuarial valuation which I have already presented. Let's now look at our normalised free cash flow progression in more detail on the next page. As you know, our H1 cash flow is typically lower than H2 due to the impact on billing cycles of 30-day month-ends, to the payment of bonuses in June, and to CapEx seasonality. As I mentioned before, our normalised free cash flow in the first half was also impacted by the timing effect of the Ofcom decision on the broadband anchor price, by receivables timing, and by the repayment of working capital financing. And there was not yet a benefit from falling CapEx as a result of the flows in capital creditors from a record build in Q4. Looking out to the financial year as a whole in FY27, the main components of NFCF growth will be lower cash CapEx and some EBITDA growth, partially offset by slightly higher interest, licence, and tax. As we have previously said, working capital programmes help mitigate the impact of higher-value handset sales and longer handset repayment contracts. So to the degree that we grow equipment revenues, we will also finance the purchase of devices, given their high value and extended payment terms. Note that international is now excluded from our group normalised free cash flow. But it would in any case have not had a much more— it would have had a much more limited impact on FY27 as we continue to expect its normalised free cash outflow to improve from around $150 million to around $50 million. Finally, Let me reiterate, as BT's new CFO, that our capital allocation framework has not changed. Let me take each component in turn. One, we start investing for growth. That includes investing with care on achieving returns above our cost of capital in our fibre and 5G networks, or our acquisition of TalkTalk. Two, we support the pension scheme, and while doing this, we ensure we mitigate investment and longevity risks. And as you have seen, this has enabled a good outcome in this triennial and the issuance of bonds to the pension scheme. 3, we aim to maintain and improve the strength of our balance sheet. In today's higher rates environment, our BBB rating, with aim to achieve BBB+, is a clear competitive strength and best for equity holders too. And 4, our shareholders' return policy is clear: to grow the dividend at a low to mid-single-digit percentage rate per annum until metrics consistent with BBB+ are reached, from which point residual cash flow will be available for enhanced distributions to shareholders. And with that, I will hand back to Allison to conclude. Thanks, Patricia. So, moving on to our guidance, as I said, this remains as set out at the full year. Updated to show International as discontinued, and for the fiscal year '27 guidance to exclude the impact of the TalkTalk acquisition. We're not giving an update on TalkTalk today since we're still awaiting for the regulatory review process to conclude. So, with that proviso for this fiscal year, we continue to expect total revenue of around £17.1 to £17.6 billion. And UK service revenue between £15.1 and £15.4 billion. Adjusted EBITDA is expected to grow year-on-year to between £8.1 and £8.2 billion. And for CapEx, having now passed the peak, we expect this to be between £4.2 to £4.3 billion on an accounting basis, with some prior year spend falling into fiscal year '27 in cash terms, as Patricia just outlined. We're continuing to target normalised free cash flow for fiscal year '27 of around £2 billion, exactly what we promised this time 2.5 years ago, and looking further ahead, we're Our medium-term guidance to the end of the decade remains sustained revenue growth, EBITDA growing ahead of UK service revenue, and normalised free cash flow reaching around £3 billion by fiscal year '30. and enabling and underpinning the updated distribution policy that we announced in May. And we will continue to allocate capital with care, as Patricia just outlined, increasing our return on capital employed over time. So to conclude, it was a busy half. Openreach continued to break records and Consumer and Business showed that we can and are winning in a highly competitive market. We continued to transform BT into a simpler, more agile, more modern-day UK-focused telco, and we reached agreement in record time with the pension scheme. to substantially close the deficit. We found a great partner in Verizon for our international business. And when the country needed us, BT stepped up to keep TalkTalk's customers and vital national services connected. Of course, there is still a huge amount to do, but we're firmly on the right path as we build a better BT for all of us. So thank you for listening, and we'll now move to Q&A, which will be audio only. If you please can try to keep it to one question each, that will leave time for everyone. So let's take the first question, please. Thank you. We will now begin the Q&A session. If you wish to ask a question, please use the raise hand function at the bottom of your screen. If you have dialed in by phone, press star 9 to raise your hand and star 6 to unmute. We will take our first question from David Wright from Bank of America. Please unmute your line and ask your question. Thank you, guys. I hope you can hear me. So, yeah, basically a question around the pension adjustment and the bond issuance. Does that Now that the deficit, or once the bonds are distributed, the deficit's essentially reduced to low hundreds of millions, does that expedite your conversations with the rating agencies on the shift to BBB+ now that that's essentially done? And the question associated with that— still one question, I'm sure about that— is the dividend cap that— or the shareholder distribution cap, it's not just dividend, I believe, that was set How exactly was that set? Is that mechanical? And I'm just obviously looking at a $2 billion cap against your fiscal '30 guide. and potentially more cash flow to return than just the $2 billion? Thank you very much. Okay, why don't I start, and then you can maybe take the credit agency question, Patricia. So first of all, you know, that headroom will— the headroom of £1.5 billion that we agreed with the pension trustees will increase at a rate of 10% every year. So by fiscal year '30, that headroom will already be at £2 billion. And that is available then. By then, as you know, that facilitates our overall dividend policy, which has not changed today, David, to be clear. It's in line with what we agreed in May, and that is to grow the dividend at low to mid-single digits. per annum starting this fiscal year until we've reached a BBB+ credit rating, and then residual cash flows will then be available for expanded distributions to shareholders at that point in time. The Board will then decide how much of that is returned at that point in time, and that could be a mix of ordinary dividends and buybacks, but that is a few years down the line from now. So there's no change to our policy that we announced, and clearly the great relationship that we have with the trustees, the strength of our covenant, and the de-risking of the overall pension fund has allowed us to increase that headroom with the trustees as and when we get there. And I don't know whether you want to touch on the credit agencies. Absolutely. Thank you, Alison. And David, in terms of the impact of these pension arrangements on evolution towards BBB+, it actually has no impact as the rating agencies see the pension deficit today, which will be replaced by increased debt. And therefore, the pension arrangement makes no difference to the path to BBB+. And, by the way, the TalkTalk transaction doesn't either, given it's small. Hope that answers your question. It does. Thank you very much. Thanks, David. Thank you. Our next question is from Maurice Patrick from Barclays. Please unmute your line and ask your question. Yeah, hi, guys. It's Maurice here from— Hi, Maurice. Hi there. Hopefully, you can hear me well. Yeah. Just a simple question, really. Obviously, we all look at revenues, EBITDA, and inside that, there's obviously lots of moving parts. Lots of— you've talked a lot about cost cutting, big opportunity for you over the coming years. You've talked about that. But I'm sure there's lots of inflationary pressures that you're having to actively manage that we don't see from the outside. So I'd love to get an understanding from you a bit about what those inflationary pressures are, how you're managing them, and what you're doing about them. Thank you. Thank you. Yeah, thanks, Maurice. I'll kick off and then pass to Patricia to give more detail. Well, first of all, You know, we have in our pricing strategies a very clear underpin that supports us from an inflationary point of view. So last year, the CPI index price increase in Openreach was 3.6%. It's probably going to be pretty similar this year. Those rates are always set at the end of October. We've then got our mid-contract pricing in our consumer business, which this year Mid-contract price increases will go up by £4 on broadband and £2.50 on mobile. And clearly, in a higher inflation environment, we'll work harder to get more of that net. through into our business. And then we are doing— we've pretty much hedged out energy for all of this fiscal year and into next fiscal year. And then what you're seeing, a lot of the chip pricing is actually being passed through to consumers in the form of handset pricing has gone up. So the manufacturers themselves are putting that through to us and we're passing that through. And that is not yet having an impact on revenue growth. In fact, you saw it was a positive in the period. We've also instigated a new connection fee for fibre customers because routers also have increased costs as a result associated with the chip pricing. And so we instigated that during the half to try and, you know, drive some— offset some of the inflationary pressure there. Patricia, do you want to say anything else? Sure. I'll just build on Alison's outline of actually how we manage the top line to offset inflationary pressures and drive it forward. In terms of the cost management, because there is indeed significant inflationary pressures, I think that the scale and our transformation programs help us manage them quite well. Alison has touched on energy and we're indeed pretty much completely hedged for '27, 70% hedged for next year, and more than 50% hedged into the long term. So it's good management on that, on that side of things. Remember that actually a large portion of our energy costs are non-commodity, around 60%. And beyond what we do in terms of pricing, think about our transformation and as we migrate off legacy platforms and switch them off, then our energy consumption should come down. So that in terms of energy. Let me talk about the other 2 cost categories. Allison's mentioned DRAM, and clearly there's the component that we are able to pass on to our customers through handset pricing. We're also dialing up our refurb in CPE. It's actually up 100% versus last year. And we're also managing the phasing of purchases of certain categories such as laptops. And then finally, the one— the third cost category I would mention is wages. And there we've already locked the pay increase for FY27. 3% for team members agreed with CWU, and that's 4.1% for colleagues earning less than $30K. And for the manager population, budget is 3%. With individual manager discretion agreed with Prospect. Hopefully that gives you a bit of a broader picture on cost management. And we saw a lot of that inflationary pressure in the half, Maurice, and we were able to offset it. And offset the drag from voice with a growing EBITDA. So we'll continue to do so going forward. Thank you. Thank you. Our next question is from Akhil Dattani from JPMorgan. Please unmute your line and ask your question. Hi, morning. Thanks for taking the question. Allison, maybe if I could start just with a very big picture question around guidance. When you joined as CEO, one of the first steps you took was to provide long-term guidance to evidence to the market the cash accretion you would see as CapEx went away and you got to that $3 billion 2030 number. I just wondered if you think going forward now whether there could be value in maybe tweaking or changing how you think about that. And I guess what I'm trying to think through is the pension prepayments that you've made today is obviously very valuable in terms of cleaning up your cash, but obviously increases your interest cost a little bit into the midterm. And secondly, when we look at the shareholder returns, if you were to increase shareholder returns substantially, let's say towards the $2 billion, whereas consensus only has $1 billion, that would similarly increase your interest. And both of these are for good reasons. So I guess what I'm trying to understand is, you know, these are 2 positive dynamics in the business, but that would actually erode free cash relative to your guide. So I just wondered, when you think about it, could it make sense to do some sort of measure that would guide in a way that doesn't impact that free cash flow metric? Are there other things that could make sense for you? Well, you know, clearly at the end of the day, it's real residual cash that's important. And I think that's what you're getting at, Akhil. Correct, yeah. And, you know, as pension deficit— as the pension payments reduce, now being replaced by the bonds, and as clearly our special items associated with restructuring also reduce, there's going to be a faster expanding real residual cash flow than there is normalized free cash flow. And that's something we can definitely take away and think about as we're getting closer to the end of the decade. But you're absolutely right, you know, normalized free cash flow, we're guiding to around $3 billion by the end of the decade because of all of those other elements that I just mentioned there. Our residual cash flow will be above the $2 billion by then. And I don't think consensus yet reflects that. But let's take it away and we can think about it when we update with the full-year results. Can I just build on that in a second, Akhil? Because I think that you mentioned cash interest going up and actually that will only happen if the zeros get refinanced, but they may also be repaid. from residual cash flow. Great. Thank you. Thanks. Thank you. Our next question is from James Ratzer from New Street Research. Please unmute your line and ask your question. Yes, good morning, afternoon, Patricia. Yeah, and hopefully you can hear me. So obviously kind of lots we can ask about, but I'll try and keep it this morning to just the kind of consumer kind of competition in the market, and in particular the ARPU trends that you are seeing. I mean, in the last kind of 6 months, those have slipped from around kind of -1% to -3% year on year. So I was just wondering if you could talk a little bit more about the kind of dynamics you are seeing there, how you see that trend in particular developing over the next kind of 6 to 12 months from here, and obviously a lot of other competitive offers around in the market, does that put pressure on your— further pressure on your blended ARPU going forward? Thank you. Okay, thanks, James. And that -1% to -3% is broadband. Clearly, overall, and you saw in the H2, our consumer service revenue actually grew year on year— in the second quarter, sorry. And if you take out the voice drag, it would have been about 1% higher. So whilst we're seeing some softness on broadband ARPUs, some of which is self-inflicted because of the voice drag. We're offsetting that with mobile ARPUs growing 3%, an underlying growing mobile base. TV base, converged base. And, you know, so yes, a little bit of softness in broadband, but overall we are projecting service revenue on the right trajectory in consumer. As we leverage all 3 of our brands, as we leverage some of the great products and innovation that we're bringing to market, as we really drive value through convergence and now also investing back into the Plusnet brand, then we believe overall we're in a strong position. And then our cost transformation, some of the interventions we're making to offset inflationary pressure. And lower sports costs as we go into the second half means that EBITDA will be able to expand at a higher rate than service revenue. Got it. That's great. Thank you. Thanks. Thank you. Our next question is from Karen Egan from Enders Analysis. Please unmute your line. And ask your question. Hi, Karen. We can't hear you. Oh. Oh, that's better. You can hear me now? Yep, yep, yep. Okay, good morning everybody. I wonder if you might be able to give a little bit more color around your operational metrics over the past several quarters. They've obviously been really quite strong in the market context and relative to competitors. I'm thinking subscriber numbers in particular. And if you could elaborate on what kind of tactical and strategic moves you think have been making a difference and are making a difference now, and any macro factors that are driving those, such as perhaps reduced alt-net pressure on the broadband side and On the mobile side, kind of where you have very strong subscriber numbers in both retail and wholesale, do you think that network quality is becoming a more important factor in consumers' minds? And if I could just have one supplementary question, if you could comment on reports that Openreach is in discussions with BMO2 for a wholesale deal. Okay, thank you. A lot of questions to unpack there, Karen. Listen, you know, we have been very focused over the last couple of years on getting our subscriber base across both consumer and broad— and business back to growth after years of decline. And so, and, you know, the strategic levers we have used is to now relaunch all 3 brands. So that we can play to all segments in the market, to properly leverage convergence, not just on EE where it was before, but now on BT as well. And to take a broader set of products and services into the business segment as well, building on our brilliant networks and our core connectivity. We are attempting to lead the market with first-to-market things so that we can lead with higher-speed fiber. We can lead with slicing. to fast lane so that every chance we can to commercialize and monetize the best network and the quality of what we can deliver to customers. is very much in there as well. And yes, you know, from an Openreach point of view, we're certainly seeing the benefit that we have been building faster, further, and now in 3 quarters of the country with our fiber when others have slowed their build. And that is coming through in lower line losses. So all of it, you know, our build, connect, accelerate strategy is really coming through across everything. Network quality, absolutely important. But resilience, even more important. Reliability and trust in this environment is, we believe, is going to become increasingly important. And that's where we believe we've got a competitive edge. And that's why we're really pushing mission-critical services and leveraging our capabilities in cybersecurity, and in mission-critical services from our experience with the 9s and the emergency service networks into a broader set of improved network services, particularly in the business segment. On the reports on Openreach and VMO2, I can't comment on speculation that's in the media, but having built to 3 quarters of the country, full fiber now with Openreach and still going further. VMO2 is the only major CP that is not on the Openreach platform. And clearly with constrained capital, higher interest rates for longer, it makes sense for all CPs and all operators to be reconsidering where they build. and where they buy. And as you know, Openreach is available to everybody. It's a regulated asset. So that's all I want to say, Karen. Thank you. Our next question is from Joshua Mills from BNP Paribas. Please unmute your line and ask your question. Hi, guys. Thank you for taking the question. Mine's on the network build and the CapEx implications. So you're not talking specifically about the TalkTalk deal or the VMO2 wholesale opportunity. It does seem like longer term there may be more customers on the Openreach base, both within your own retail customer base, but potentially with new wholesale partners. So how does that change your medium-term view on fibre coverage beyond the 25 million target and the pace at which you want to pursue that? And then, sorry, if I can relate this back to the CapEx question, you did try and provide a bit of guidance there on the gaps between accounting and cash CapEx, both for the second half and for 2024. Could you just give us some explicit numbers on what we should expect the cash CapEx to be this year and for 2028, if that's something which Patricia said? Happy to do. Thank you. Yeah, Patricia can take that at the end, Joshua. So on the network build, our plans do not change. We will hit the 25 million in March. And we will continue to build to around 30 million by around fiscal year '32. And that is linked very much to the availability of BD UK funding. for those more rural, more expensive-to-build areas. So that build plan has not changed. We've clearly seen increased demand in this fiscal year. for provisioning and connections, and we've managed that within our CapEx envelope, and we will continue to do so. And it's too early to comment what you know, the implications of TalkTalk because, you know, it's still under regulatory review at the moment. But, you know, we've done a very good job at managing that increased demand. And, you know, the £25 to £30 million build is over the next 7 years. Patricia? Yeah, thanks, Alison. Yeah, I think what I, what I mentioned earlier, Josh, was that 2028, we should expect cash CapEx to be a bit less than twice the H2 cash CapEx. But I think if I stand back to think about cash CapEx being £100 million ahead of reported CapEx. And that stands for the second half of the year as well. So we should take your CapEx guidance this year, back out the cash CapEx for H2, and then extrapolate that for '28? It's £100 million more for FY27. If you look at H1, it was £200 million more reported CapEx— cash CapEx than reported CapEx. So we're talking about £100 million for the year. Thank you. Thank you. Our next question is from Andrew Lee from Goldman Sachs. Please unmute your line and ask your question. Good morning, everyone. I had a question. Morning. I had a question. Hey, Tricia, and hey, Allison. I had a question on cost efficiency and AI. So telcos and BT appear to have shifted in the market size from being AI winners to losers. And that's because telco BT throughout the UK in particular are seen as agentic AI losers specifically. We're also coming closer to calendar 2027 and I think you'd mentioned previously that's when we'd start to get more of a tailwind from AI cost efficiencies. So just wondering how you view all this. Will AI cost efficiencies offset the headwinds from agentic AI? Is the net of this any different to how you expect or what you expected when you set the long-term free cash flow guidance? Just helping us how you're thinking about the kind of why telcos should be viewed as a winner rather than a loser in the, in the AI debate. Thank you. I still believe telcos like BT in particular will be an AI winner. Andrew, because AI is dramatically— has dramatic potential to improve how we serve our customers. how we run our operations, and how we just move faster in everything we do. So, you know, what are we seeing? AI is one part of a multifaceted transformation, business transformation, both cultural and operational at BT. So we're kind of embedding it everywhere. And where we see the real benefits today, which are not yet scaling to have a bottom-line benefit, is, as I said on the call, how our agents are able to use it for call summarization to get better insights and information on their customers so they can do better cross-sell and upsell. We're seeing real benefits in our B2B division. where we had a lot of legacy products and services and very poor visibility on end-to-end processes. So we've got a great example of where our own team created an agent recently to improve the bids, the complex bids for some of our more complex customers. That agent has already reduced the bid time from 14-man weeks to 3-man days. So just think about the scaling opportunity of that. So we remain, you know, convinced that AI will have great operational and customer service improvement. In terms of this, the threat from agentic AI, well, now we need to start feeding the models and feeding the agents with all of the great knowledge, not just about price, but the quality services. And the benefits of convergence of all of our brands. So the agents are this new channel. They understand the true value of buying a product and service. from a BT brand versus others. And, you know, we've yet to see how it's all going to play out from a regulatory point of view, because clearly to remain the most trusted connector, we want to ensure as we deal with agents in the future that we can understand the identity, whether they have the consent of the human. behind there as well. So quite a lot to run through on the agentic side, but we'll be investing in feeding those models so that the agents can see the true value and breadth of our products and services. And finally, the UK. We've had, you know, one-touch switching, lots of websites for understanding, you know, where the best deals and what best offers are for many, many years. The agents will just be feeding from that. And we have defended our business very well through that as well. So overall, AI will definitely be beneficiary to a business like BT as it continues on its transformation. £3.5 billion by the end of the period. And we will see in the coming months whether, you know, whether it's how much of an upside it might bring to that or not. But we are very confident on our £3 billion programme, which is now excluding international, as a result of what we're seeing from AI at this point in time. Thank you. Thank you. Just one quick follow-up. You said the real benefits are not yet scaling to the bottom line in terms of the savings from the cost. Is that an FY28 thing or is it more FY29? How quickly do we actually see that? It is all part of our journey towards our Thank you. Our next question is from Robert Grindle from Deutsche Bank. Please unmute your line and ask your question. Yeah, hi there. Good morning. Hi, Robert. Can you hear me? Yeah, good stuff. I've got a CapEx question too. It's about the mobile side because we recently heard from Vodafone 3, who are busy combining and upgrading their networks and want to replace you guys as best network. And O2 doesn't seem to be scaling back its CapEx despite scaling back its fixed CapEx. So just to ask, how are you feeling about your trajectory to keep up with the competitors? Do you need to strike new towers deals and stuff like that? Thanks. We remain confident in our ability to sustain best network. We keep winning the awards. I think we're recognised still as the best network in some of the Ofcom surveys recently as well. And our CapEx, our midterm CapEx plan absolutely allows us to continue to invest in our mobile networks going forward, Robert. Thank you. Thanks. Thank you. Our final question is from Nick Lyall from Berenberg. Please unmute your line and ask your question. at a unit level, but we're expecting kind of consumer EBITDA to be fairly flattish for the year. And in terms of Openreach, You know, as we passed peak CapEx in Q4, clearly there's been quite dramatic transformation benefits that are starting to flow through in the Openreach division. But they're really benefiting from more customers on fiber versus copper, lower energy usage as well. Hi, Alison. Hi, Patricia. I hope you can hear me. Just a quick clarification first on the consumer side, Alison. You sound quite sort of optimistic still about the second half for consumer. I wondered whether the cost pull-through for the first half had mitigated some of those benefits. So what's the actual year-on-year, full-year consumer EBITDA expected? Is it up or is it flat? Can you give us a little bit of guidance on that, firstly? And then secondly, on the OpEx outlook for Openreach, you've got a few big things coming up— PSTN switch-off. You're still cutting costs between 5% and 8%. What's the outlook for costs over the next, say, 18 to 24 months, please? Do cost savings actually accelerate from here? Thank you. Thanks, Nick. So for consumer side, we don't guide So, you know, we are going to continue to see cost transformation be beneficial to all of our units. And in fact, it should be more visible in our business unit going forward now as well. Thanks, Andrew. Anything specific— I mean, given PSTN shutdown and everything else, is there anything specific in Openreach you could sort of outline? I expect some of the savings to actually accelerate a touch from here, possibly. Yeah, I guess there's nothing really specific because remember the PSTN shutdown does not allow us to get off of copper. Totally. But what we have specific in our retail units at the moment is we're carrying costs to manage those— the long tail of PSTN customers. You know, still a million to get off, and they're particularly vulnerable households, vulnerable customers, and CNI customers. So we are carrying, you know, kind of, you know, extra contact center costs as we handhold a lot of those customers to switch over from the PSTN to alternative voice products. So that is I'd say more in the retail units that you'll see an SG&A benefit going forward. I don't know whether you'd want to build on that, Patricia. Look, what I was going to say, Nick, is as Allison says, we don't guide at a divisional level. I think that what we've said around the PSTN switchoff is that over time it will build to around, you know, high double-digit EBITDA uplift. Overall, but that builds over time. So as you know, migrations, shutdowns, replacements take, take longer to apply. Super, thank you. Thanks, Nick. This concludes the Q&A session. I'll now hand back to Allison for closing remarks. Thank you all for your time today and for the Q&As, and I'm sure Patricia and I will be seeing the vast majority of you as we do our roadshow now. in the coming days and weeks. So thank you again and see you all soon. Thank you. Thank you for joining today's call. We are no longer live. Have a nice day.