BT Group CAPEX increased on 6.9% while Revenue decreased slightly on 1.4%
10 May 2018 • About BT Group (
$BT.A) • By InTwits
BT Group reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- BT Group has high CAPEX intensity: 5 year average CAPEX/Revenue was 13.3%. At the same time it's a lot of higher than industry average of 8.2%.
- CAPEX is quite volatile: 1,794 TRYm in 2018, 819 TRYm in 2017, 1,021 TRYm in 2016, 561 TRYm in 2015, 401 TRYm in 2014
- The company has highly profitable business model: ROIC is 15.4%
- It operates with high leverage: Net Debt/EBITDA is 2.0x while industry average is 1.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased slightly on 1.4%. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.1 pp from 28.0% to 29.1% in FY2018.
Net Income margin increased slightly on 0.64 pp from 7.9% to 8.6% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 BT Group had CAPEX/Revenue of 14.2%. CAPEX/Revenue increased slightly on 0.72 pp from 13.4% in FY2015 to 14.2% in FY2018. For the last three years the average CAPEX/Revenue was 13.4%.
Return on investment
The company operates at high and attractive ROE (21.8%) while ROIC is a bit lower (15.4%). ROIC increased slightly on 1.5 pp from 13.9% to 15.4% in FY2018. ROE increased slightly on 1.1 pp from 20.7% to 21.8% in FY2018. ROIC declined at -6.2 pp per annum in FY2014-FY2018.
Leverage (Debt)
Debt level is 2.0x Net Debt / EBITDA and 2.1x Debt / EBITDA. Net Debt / EBITDA jumped on 0.2x from 1.8x to 2.0x in FY2018. Debt surged on 12.3% while cash didn't change in FY2018.
BT Group has short term refinancing risk: cash is only 23.1% of short term debt.
Financial and operational results
FY ended 31 Mar 2018
BT Group ($BT.A) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 18,287 | 17,979 | 19,012 | 24,062 | 23,723 | -1.4% |
| EBITDA | 5,838 | 6,017 | 6,243 | 6,727 | 6,895 | 2.5% |
| Net Income | 2,018 | 2,135 | 2,466 | 1,908 | 2,032 | 6.5% |
Balance Sheet
|
|---|
| Cash | 695 | 434 | 996 | 528 | 528 | 0.0% |
| Short Term Debt | 1,873 | 1,900 | 3,736 | 2,632 | 2,281 | -13.3% |
| Long Term Debt | 7,941 | 7,868 | 11,025 | 10,081 | 11,994 | 19.0% |
Cash flow
|
|---|
| Capex | 2,356 | 2,418 | 2,438 | 3,145 | 3,362 | 6.9% |
Ratios
|
|---|
| Revenue growth | 1.0% | -1.7% | 5.7% | 26.6% | -1.4% | |
| EBITDA growth | 0.9% | 3.1% | 3.8% | 7.8% | 2.5% | |
|
|---|
| EBITDA Margin | 31.9% | 33.5% | 32.8% | 28.0% | 29.1% | 1.1% |
| Net Income Margin | 11.0% | 11.9% | 13.0% | 7.9% | 8.6% | 0.6% |
| CAPEX, % of revenue | 12.9% | 13.4% | 12.8% | 13.1% | 14.2% | 1.1% |
|
|---|
| ROIC | 34.7% | 37.5% | 20.7% | 13.9% | 15.4% | 1.5% |
| ROE | | | 45.2% | 20.7% | 21.8% | 1.1% |
| Net Debt/EBITDA | 1.6x | 1.6x | 2.2x | 1.8x | 2.0x | 0.2x |
Peers in Fixed Line Telecommunications
Below you can find BT Group benchmarking vs. other companies in Fixed Line Telecommunications industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Telecom Egypt ($TEEG) | | 0.2% | 14.5% | 33.1% | |
| Adept Telecom ($ADT) | -0.8% | 5.8% | 30.9% | 19.2% | |
| Kt Corp ($KTCD) | -1.6% | -4.9% | 2.1% | 2.8% | |
| Rostelekom ($RKMD) | | -0.5% | 0.0% | 2.7% | |
| Ooredoo Qsc ($ORDS) | -1.9% | -3.2% | 1.1% | 0.7% | |
| |
|---|
| Median (11 companies) | -1.2% | -0.4% | 0.1% | 0.3% | |
|---|
| BT Group ($BT.A) | | -1.7% | 5.7% | 26.6% | -1.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Kt Corp ($KTCD) | 77.9% | 77.9% | 78.5% | 83.5% | |
| Koninklijke Kpn Nv ($0O8F) | | | 68.7% | 70.4% | |
| Verizon Communications Inc ($VZC) | 60.7% | 60.1% | 59.2% | 59.1% | |
| O2 Czech Republic As ($O2CZ) | | | 48.5% | 48.7% | |
| Adept Telecom ($ADT) | 36.4% | 37.6% | 40.3% | 42.3% | |
| |
|---|
| Median (6 companies) | 43.9% | 41.5% | 48.5% | 53.9% | |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ooredoo Qsc ($ORDS) | 37.6% | 39.2% | 39.2% | 40.5% | |
| Koninklijke Kpn Nv ($0O8F) | 39.1% | 33.2% | 35.7% | 35.5% | |
| Verizon Communications Inc ($VZC) | 28.4% | 37.3% | 34.1% | 35.2% | |
| Hellenic Telecom.Organization S.A. ($OTES) | 35.4% | 31.3% | 32.4% | 32.2% | |
| Telefonica Sa ($TDE) | 31.7% | 24.1% | 29.1% | 31.1% | |
| |
|---|
| Median (11 companies) | 31.7% | 29.1% | 28.2% | 31.0% | |
|---|
| BT Group ($BT.A) | 31.9% | 33.5% | 32.8% | 28.0% | 29.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Telecom Egypt ($TEEG) | 13.0% | 21.4% | 23.7% | 32.8% | |
| Hellenic Telecom.Organization S.A. ($OTES) | 15.4% | 16.9% | 16.7% | 23.8% | |
| Rostelekom ($RKMD) | 19.3% | 21.1% | 20.8% | 19.9% | |
| Telefonica Sa ($TDE) | 19.1% | 18.7% | 17.7% | 17.3% | |
| Orange Polska Sa ($OPLD) | 17.6% | 16.9% | 44.8% | 17.0% | |
| |
|---|
| Median (11 companies) | 13.0% | 14.4% | 15.1% | 13.7% | |
|---|
| BT Group ($BT.A) | 12.9% | 13.4% | 12.8% | 13.1% | 14.2% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| O2 Czech Republic As ($O2CZ) | 7.2% | 14.5% | 26.8% | 25.8% | |
| Verizon Communications Inc ($VZC) | 10.1% | 19.3% | 15.4% | 14.8% | |
| Adept Telecom ($ADT) | 13.2% | 14.3% | 16.5% | 14.2% | |
| Telefonica Sa ($TDE) | 7.7% | 4.4% | 7.0% | 8.8% | |
| Koninklijke Kpn Nv ($0O8F) | 7.6% | 5.1% | 7.1% | 8.3% | |
| |
|---|
| Median (11 companies) | 7.7% | 7.1% | 7.1% | 7.9% | |
|---|
| BT Group ($BT.A) | 34.7% | 37.5% | 20.7% | 13.9% | 15.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Telefonica Sa ($TDE) | 3.6x | 4.2x | 3.6x | 3.0x | |
| Koninklijke Kpn Nv ($0O8F) | 3.0x | 3.6x | 3.1x | 2.9x | |
| Verizon Communications Inc ($VZC) | 2.8x | 2.1x | 2.4x | 2.6x | |
| Orange Polska Sa ($OPLD) | 1.0x | 1.2x | 5.1x | 2.3x | |
| Adept Telecom ($ADT) | 0.7x | 0.3x | 1.0x | 2.2x | |
| |
|---|
| Median (11 companies) | 1.4x | 1.2x | 1.5x | 2.0x | |
|---|
| BT Group ($BT.A) | 1.6x | 1.6x | 2.2x | 1.8x | 2.0x |
