1 November 2018 – interim results

The telecoms group has surprised the market by producing impressive interim results for the six month period to 30 September.  Adjusted revenues fell by 1% to £11.6bn as growth in the consumer business was offset by regulated price reductions in Openreach and declines in the group’s enterprise businesses.  However, adjusted EBITDA was 2% higher at £3.68bn (2017: £3.60m) helped by higher volumes and mix of high-end smart phones in the consumer business and restructuring related cost savings.  Adjusted earnings per share rose to 13.3p (2017: £12.8p) although the interim dividend was cut to 4.62p (2017: 4.85p).  The interim dividend is 30% of last year’s total of 15.4p and the total dividend for the year is expected to be maintained.  The group expects its full year adjusted EBITDA to be towards the upper end of previous guidance of between £7.3bn and £7.4bn and this has caused the share price to continue to rally.  The shares are now at their highest level for nine months and there is a feeling that sentiment is changing towards the company and further upside in the share price seems likely.  The dividend yield on the shares is now 5.9% and this should help to attract investors.  The shares are a BUY.