Earnings call: BT Group reports robust FY24 results, raises dividend

BT Group PLC (LON:BT.A) has announced its full-year results for the fiscal year ending March 31, 2024, showcasing a strong financial performance with increased revenue, EBITDA, and an elevated dividend payout. The company has also reported significant cost savings and a strategic focus on expanding next-generation network connectivity, which is expected to drive future growth.

Key Takeaways

• BT Group's adjusted revenue reached £20.8 billion, marking a 2% increase, and adjusted EBITDA grew by 1% to £8.1 billion.
• CapEx decreased to £4.9 billion, surpassing peak CapEx, with normalized free cash flow expected to rise.
• £3 billion in cost savings were achieved 12 months ahead of schedule.
• The total dividend for shareholders increased to 8.00p per share.
• Openreach reported revenue and EBITDA growth with over 14 million premises covered by full fiber and strong market take-up.
• The company paid no UK cash tax in FY '24 and expects this trend to continue until FY '27.
• The new CEO emphasized accelerating fiber build and monetization, improving customer experience, and driving further cost savings.

Company Outlook

• Openreach is on track to reach 25 million premises by December 2026, with market-leading take-up and growth in ARPU expected.
• BT Group aims for £3 billion in gross annualized cost savings over the next 5 years, with a reduction in headcount planned by the end of the decade.
• For FY '25, cash CapEx is expected to be around £200 million higher than reported CapEx, with a focus on investment in growth and maintaining a strong balance sheet.

Bearish Highlights

• Business revenue declined, although there were signs of operational improvement.
• The IAS 19 pension deficit increased by £1.7 billion to £4.8 billion.
• A non-cash impairment of goodwill allocated to the business of £488 million was recognized.

Bullish Highlights

• Consumer revenue and EBITDA grew, driven by increased connections in full fiber and 5G.
• The Department for Science, Innovation, and Technology selected Openreach as the preferred bidder for the Project Gigabit contract.
• The company delivered another year of top and bottom line growth, outperforming on revenue, EBITDA, and normalized free cash flow.

Misses

• Other EBITDA for FY '24 was adversely affected by £29 million due to lease termination exit costs.
• A decline in market share was acknowledged, with expectations of moderate line losses in the coming year.

Q&A Highlights

• CEO Allison Kirkby discussed plans to increase broadband coverage in rural areas and stabilize the mobile and broadband retail base.
• The company is exploring options for its global business, aiming to focus on the UK market for growth.
• Executives stated that they expect revenue recovery in the Consumer segment in the second half of the year and plan to grow market share in high-speed broadband areas.

BT Group's financial results and strategic plans reveal a company that is successfully navigating the challenges of the telecommunications industry. With a clear focus on expanding its next-generation network capabilities and achieving cost efficiencies, BT Group is positioning itself for sustained growth in the years to come. The company's commitment to shareholder returns, as evidenced by the increased dividend, further underscores its confidence in its financial health and future prospects.

Full transcript - None (BTGOF) Q4 2024:

Mark Lidiard: Good morning, and welcome everyone to BT Group's Results Presentation for the Full Year ended March 31, 2024. Presenting today is Allison Kirkby, BT Group Chief Executive; and Simon Lowth, BT Group CFO. A Q&A session will follow the presentation. I'd 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 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 Allison.

Allison Kirkby: And just to be clear, that was not a deep fake. That was Mark. He's obviously very shy about speaking in public. So good morning everyone and welcome to our full year results presentation. And thank you so much for taking the time to join us today. It's honestly a real honor to present BT Group results for the first time here as CEO. By way of an agenda, we will begin by looking back at some of the progress we've made this financial year before looking forward, outlining our sharpened focus and outlook and then moving on to Q&A, myself and Simon. So let's start with the full year highlights on Slide 4. First and foremost, I believe our strategy is the right strategy. It's about building and connecting our customers to next-generation networks at pace, creating standout customer experiences and leading the way to a brighter and more sustainable future for BT and all its stakeholders. This strategy has continued to prove itself and has delivered another solid set of results. Our focus to improve customer experience has meant that Group NPS trends were positive throughout the year, up 1 point to '24 overall. And a solid operating and financial performance led to growth in both adjusted revenue and EBITDA. CapEx reduced to £4.9 billion despite record build, driving normalized free cash flow ahead of our guidance to 1.3 billion. And as a result of structural efficiencies, especially in Openreach, I'm today announcing that we have now passed peak CapEx. Yes, you read it right earlier and you're hearing it right again. We have now passed peak CapEx. This, together with ongoing operating efficiencies, means we expect normalized free cash flow to increase from this point on. We also achieved our £3 billion of gross annualized cost savings 12 months early and at a cost of £1.5 billion, which is around £100 million lower than we had forecast. This is a great achievement and I see a huge opportunity for further savings, which I will outline later. Enabled by this performance and demonstrating our confidence in our plans and in line with our progressive dividend policy, we're also increasing our total dividend to 8.00p per share. Personally, as you can imagine, I am pleased with these results as they give me confidence in the strategy that has delivered them. However, I do believe that with greater focus, improved operational discipline and an acceleration of pace of modernization, we can deliver an even brighter future for BT Group faster and more consistently. But more on that in a moment. I first want to reflect on how we've actually performed in each of our CFUs in the recent period. Slide 5, Openreach delivered another strong performance with growth in both revenue and EBITDA. Our full fibre footprint today stands at more than 14 million premises and in the fourth quarter, our annualized build rate accelerated to 4 million. Customer demand for full fibre has remained high with just under 5 million premises now connected, which means we have market leading take-up of 34% and an excellent trust pilot rating. Our Ethernet business often overlooked is actually more than a £1 billion business in its own right and it's also growing with revenue up 11% and ARPU up 6%. And with respect to broadband lines, which I know is a very popular topic of conversation, I'd like to start with my context. We have a significant 74% share of the UK's fixed wholesale broadband lines. And as outlined in the Openreach business briefing back in November '21, we always assumed that we would lose some lines, roughly 2% per year and we have. We did, however, expect market growth to offset some of those losses. But in fact, the market has declined on the back of a downturn in housebuilding and the cost of living crisis hitting broadband adoption. But just to be clear, we are not seeing any meaningful acceleration in competitor losses as they've been broadly flat in recent quarters. In areas where we have built full fibre, our broadband line base has and is growing. And ARPU given recent inflation is ahead of expectations, up 10% and rises with the mix improvement to full fibre, which far outweighs the drag from the losses of lower value and higher full rate copper lines. So we remain very comfortable with the expected returns on our investment. And considering our significant market share, our best defense has been to build full fibre faster and more efficiently than anyone else, which is exactly what we have been and are and will be doing. Finally, I'm really pleased to announce today that the Department for Science, innovation and Technology has notified Openreach of its preferred bidder status for the Project C -- the Type C Project Gigabit cross-regional supplier contract, which in the early phases covers over 100,000 hard to reach rural premises. The government have currently stated that Type C contracts are up to 0.5 million premises, including £800 million of grant funding. This allows us to build momentum even further in the coming years. So moving to the next slide and consumer, where we delivered another solid performance with growth in both revenue and EBITDA. We continue to connect customers at pace with our full fiber base up 39% and 5G connections up 22%. ARPU for both fixed and mobile has been strong with broadband up 5% to £41 and postpaid mobile up 9% to £19. As anticipated, the gross to net drop through from ARPU to EBITDA reduced to around 30%. And this fiscal year that we're now entering, we expect that drop through to be even lower following the compounding of the high price rises that we've seen over the last two years and as we rebalance the front and back book before recovering in the second half of the year and again in fiscal year '26. However, despite the significant price rises and the competitive markets that we operate in, we held monthly churn for the year at 1.1% for both our broadband and our mobile bases. This reflects our strength in customer service with both BT and EE Ofcom complaints equal to or lower than industry average for mobile, broadband and landline. In October, we launched our new integrated EE digital platform to drive performance. This included new connectivity propositions, building on our fiber and 5G leadership and better tech products and services delivered via a simpler set of digital customer journeys. Overall, it's early days but it is improving customer experience with those that have migrated showing a higher rate of convergence and a higher NPS, and sets us up for a return to growth in our base, our ARPUs and in the number of services our customers buy from us going forward. Moving to Slide 7. In spite of a 2% drop in revenue, business is actually showing the early signs of operational improvement. The trends are clear. They've been there for a while. The market is shifting to next generation products and solutions and we now need to migrate our customers to them at pace, all of them, full fibre, 5G, Voice over IP and secure cloud-based services. Progress, albeit from a low base, has been good this year with our 5G base up 80% and our full fibre connections up almost 60%. We also have over 50% of our customers own Voice over IP, so halfway through the PSTN transition and high NPS scores speak to the relatively seamless way in which we've managed those migrations. In certain revenue streams, business is actually performing even more positively, such as security, we're up 11% and the SMB segment where we're up 4%, and we're also seeing improvements in NPS. The biggest challenges for business have been the speed at which we've been able to move off legacy services, and the effectiveness of offsetting the rising costs with pricing. Clearly, these legacy pricing and cost pressures combined with the FX headwinds led to a weak EBITDA outcome for the year. But Bas and the team have been working to address these since ripping the blaster in his words late last year, and that effort continues. Now let me hand you over to Simon, who is going to take you through the numbers.

Simon Lowth: Well, thank you, Alison, and good morning to everybody. So starting with our individual unit results on Slide 9. Consumer revenue was up 4% for the year. Service revenue grew by 5% that was driven by annual contractual price rise, the higher TT base and higher roaming, partially offset by a decline in voice revenues and the continued handset to SIMO migration. EBITDA grew by 5%, driven by the increased service revenue partially offset by some higher input costs and some prior year one-off items. In our business division, revenue was down 2%. This was driven by declines in high-margin legacy products and managed contracts, some foreign exchange impacts and a £41 million revenue adjustment in Q4 that reflects the risk of billing and accuracy on a small number of products with bespoke pricing. These headwinds were only partially offset by continued growth in our small and medium business segment and in security. EBITDA declined by 16% for the year, and that reflected the lower revenue, but also higher input costs, only partly offset by the benefits of our cost transformation. The one-off revenue adjustment also impacted Q4 EBITDA, but it was partially offset by some lower costs. Openreach grew revenue 7% in the year. That was driven by CPI-linked price increases, and growing sales of fiber-enabled products and Ethernet. This was partially offset by declines in the base of broadband and voice-only lines. The fiber-enabled base grew offset by declines in the copper base. Openreach's EBITDA grew by 9%. That was driven by the revenue flow-through, but also by improved cost transformation, including 3,500 lower FTE, partly offset by some pay inflation and the higher FTTP provision volumes. Openreach's Q4 EBITDA was impacted by one-off costs relating to an historical commercial dispute. Absent the one-off, Q4 EBITDA margin would have been consistent with Q1-3. Other EBITDA for FY '24 was 29 million adverse, driven by exit costs from terminating leases as we continue to rationalize our office estate through our better workplace program. Going forward, we expect other EBITDA to outturn closer to zero. Moving to our group results on Slide 10. Overall, we saw a solid performance, delivering another year of top and bottom line growth. We've achieved our FY '24 guidance for revenue and EBITDA, delivering growth on a pro forma basis. We outperformed on normalized free cash flow that was driven by CapEx efficiencies across the business. Adjusted revenue for the year was £20.8 billion, that's up 2% on a pro forma basis. Growth in Openreach and consumer was offset by a decline in business. Adjusted operating costs before depreciation were up 2% on a pro forma basis. In FY '24, the gross benefits from our cost transformation were more than offset by the impacts of inflation, notably two pay rises and some increased business rates and non-commodity charges in energy, we also had some increased sales commissions and network running costs. Adjusted EBITDA for the year was £8.1 billion. That's up 1% on a pro forma basis. Revenue growth combined with cost transformation, together more than offset those inflationary pressures. We've recognized a non-cash impairment of goodwill allocated to business of £488 million as a specific item, reflecting the significant decline in profitability in recent years. CapEx excluding spectrum costs came in at £4.9 billion for the year. That's down 3% and below our guidance range. This was achieved through a combination of lower FTTP build unit costs, increased efficiency in our systems and IT delivery and some more targeted customer contract investments. Cash CapEx for the full year was £5 billion. This was higher than reported CapEx due to £160 million of grant funding, including the BDUK partially offset by the timing of capital creditor payments. For FY '25, we expect cash CapEx to be around £200 million higher than reported CapEx due to the net impact of grant funding and capital creditors. Normalized free cash flow decreased 4% year-on-year. Now the benefit of EBITDA growth and the lower cash CapEx was more than offset by working capital timing and of course, the £200 million tax rebate in the prior year. At a high level, the increased working capital outflow in FY '24 was driven by £100 million of receivables timing and then a net flow outflow of £100 million from repayment of supplier financing and set monetization and forward copper sales, which net to that 100. We paid no UK cash tax in FY'24, and we welcome the government's announcement in last year's autumn statement to make full expensing permanent. We will continue to pay no UK cash tax in FY '25 through to FY '27. From FY '28 onwards, we will start to pay UK cash tax as our CapEx reduces, although we will continue to benefit from the cumulative losses early into the next decade. The IAS 19 pension deficit increased by £1.7 billion to £4.8 billion. That was mainly due to the increase in real interest rates and the narrowing of credit spreads partially offset by pension contributions. As a reminder, the BT pension scheme hedges on a funding basis, which mechanically means we're over-hedged on an IAS 19 basis. Our cash contributions are unaffected by the IAS 19 deficit. And as Allison just announced, we're proposing a final dividend of 5.69p per share, that's an increase of 3.9% bringing the full year FY '24 dividend to 8.00p per share. And on that note, I'll hand back to Allison.

Allison Kirkby: Right. So for those of you that are interested, today is actually my 106th day as CEO of BT. So I thought it would actually be a good opportunity to set out my first impressions, where I see our greater strengths, where we need to be better, and how we're going to drive significant value for all of our stakeholders in the years ahead. After five years on the board, it has still been important for me to meet our customers and our colleagues and really get under the bonnet of our operations. I have traveled the breadth and width of the UK. There were three key things I was looking to get a broader perspective on; where do we have the means to win, what do we want to be? And how are we going to get there faster? As you all know, BT Group has a fantastic set of unique assets. We are the digital backbone of the UK with the leading next-generation networks. Our fixed network covers around 98% of the country with Full Fibre already reaching nearly half of that, providing us a significant competitive advantage. In mobile, we provide 88% geographic coverage with either 4G or 5G, and our converged core is designed to manage peak network growth and provide the best possible connectivity experience. We have deep relationships with the customers, whether that's our strong partnerships with CPs and Openreach or the 25 million customers and 1.2 million UK businesses that we work with every day. Fun fact, we keep up to around 200 million devices connected across our fixed and mobile networks every single day. Our brand equities, our loyal customers and low churn are evidence of the power and stability of these connections and these relationships. In Openreach, with our customers' first choice delivering fixed access at scale throughout the country, providing excellent customer service with a fair and predictable long-term pricing model. In Consumer, we are the best positioned to win in the retail market. We have three strong brands, one of the UK's largest subscription businesses. We now have an integrated digital platform and a growing suite of tech products and services. And in business, we enjoy a relationship with more companies than anyone else in the country, from the smallest start-up to the largest public and private organizations. And we've seen a really positive response to global fabric, our network as a service proposition for multinational customers. These assets, combined with our personal and brilliant customer service, give us a unique opportunity to fully embed ourselves in the digital fabric of our customers' daily lives. And they are underpinned by a highly experienced workforce, our unrivaled scale in digital and technical capabilities and, of course, our strong balance sheet. Taken together, I believe these assets represent a distinct and unique competitive advantage in the UK and for the UK. But what does success look like as we go forward. Well, many of you know that I've spent almost 15 years in this industry with experience in both Challenger and incumbent telcos across multiple markets. And what I've seen is that the most consistently successful telcos are national champions with a proud history, clear purpose and geographic scale and who have modernized, simplified and leveraged new technologies to stay ahead of the competition, and become even more relevant for the customers in an increasingly complex digital world. But what do they have that BT doesn't yet have? Well, it starts with culture. The best telcos have that clear purpose and are single-mindedly focused on customer experience and the excel to execution. And they're constantly challenging themselves to be better. As a result, they have a highly engaged, highly empowered and a highly productive workforce. Customer experience has been built as a key differentiator relative to their peers. They use data and insights to drive deeper customer understanding, resulting in higher rates of brand awareness, engagement, consideration, share of wallet and customer loyalty through iconic brands excelling at service in both assisted and digital channels, and they're recognized as being vital to solving their customers' everyday digital needs. The best telcos are of critical national importance with the best network coverage, the best services and are always the most reliable and trusted provider to all parts of society. And they're generally providing most of the emergency and critical services that governments and the public sector rely upon, and their thought leaders in their country's tech, digital and cyber defense roadmaps. Finally, and of course, the best telcos demonstrate disciplined capital allocation; have a focus on constant cost transformation; drive consistent revenue and EBITDA growth; and have a ROCE mindset. BT has some of these characteristics already, but not enough of them. And as you've seen from me elsewhere, you can expect that I will be highly focused on all of these pivotal enablers to drive value for all our stakeholders, colleagues, customers, the country and most importantly, now our shareholders, and ultimately to achieve these best-in-class levels of performance. So what are we actually going to do now? Well, this slide will be familiar to many, it sets out our current strategic framework, including the three pillars, the five priorities and our one unifying ambition, which was to be the world's most trusted connector of people, devices and machines. I do believe that this is the right strategy, but we now need to sharpen our focus and double down on a few key areas, recognizing that the transition from fiber build to fiber monetization is happening now, that we're going to concentrate on the UK and that we'll focus the next phase of our transformation efforts to accelerate end-to-end PAM BT product, process, platform and more importantly, service simplification. Whilst we've clarified our ambition is to now be the UK.'s most trusted connector, our sharpened focus remains centered around our existing priorities. In Openreach, it's more of the same. We're going to continue to build out the highest quality fiber backbone for the country faster and now more efficiently than anyone else without the need to increase group CapEx levels further. We will build 4 million homes this year at the same total cost as it took us to build 3.5 million homes last year keeping us on track to deliver the 25 million homes by the end of '26 and the returns we committed to when we first started out. In consumer, we've made significant investments into our networks and our new digital platform. We now need to bring the benefits of both to our customers by accelerating migrations to these next-generation platforms and delivering their best converged customer experience in the country. In business, we need to deliver on the better on BT strategy that we launched last year with now a focus on the UK as we explore options to optimize our global business. And in terms of transformation, this next phase will generate a further £3 billion of gross annualized cost savings to be delivered by the end of fiscal year '29. And we will continue to optimize our portfolio through efficient capital allocation to drive value for all our stakeholders and an increased return for our shareholders. My confidence in us delivering these promises is reflected in our new mid-term normalized free cash flow guidance that Simon will outline later. So to answer my three earlier questions. One, we will capitalize on our unique assets. Two, we will become the UK's most trusted connector of people, devices and machines and three we will get there by taking action on our culture, customer experience and operational rigor to improve consistency of delivery. Let's now look briefly at how we'll execute this through each of our CFUs and how we'll measure progress along the way starting with Openreach on Slide 16. As I said, we're firmly on track to reach the 25 million premises passed by December '26. We're building faster than anyone else whilst maintaining a premium quality at a lower cost than our major competitors, below £300 per premise. Our scale efficiencies and our constant engineering innovation is driving increased EBITDA and normalized free cash flow which will, as said before significantly increase post the peak build. On connections, we excel with market-leading take-up of 34% and this is even higher where we built 2 or more years ago where we're seeing a take-up of over 50%. With best-in-class provisioning, full integration with our CPs and excellent customer service we are confident we can accelerate connections which combined with indexation will drive further ARPU growth. And in our operations, our full fibre fault rate remains about 60% lower than copper, as we migrate customers to fiber therefore full volumes continue to fall benefiting both our customers and our OpEx. On broadband lines, we forecast that competitor losses will continue at a similar rate to what we've been seeing as we always expect to lose a bit of market share. Of course, if current market headwinds continue we expect moderately higher losses in this fiscal year, but this will be naturally addressed when the market returns to growth. So in summary for Openreach, we'll continue to build and connect our customers to full fiber better, faster, further and more efficiently than our competitors driving a better product for our customers and a fair return for our shareholders. Moving to Slide 17. In Consumer, our primary focus is in winning the household and driving convergence of our core services to improve customer lifetime value. As I said, we're already on this journey with both our full fibre base and 5G connections continuing to grow. And looking forward, it's no time to leverage our brand strength, our best networks, our new digital ID platform and services and one of the largest subscription bases in the country. And as a result, we're confident that we can grow our customer numbers again and our ARPUs as we enable all of our customers to live, work, game and learn on the U.K's best converged network. Moving on to business on Slide 18. It's a clear example of where our sharpened focus is really needed. By doubling down on the UK alongside radical modernization we will accelerate the migration of our customers to next-generation secure, cloud-based products and services. We'll streamline, standardize and scale our portfolio and as a result dramatically improve customer relevance and experience while reducing our cost base. This combined with the trust we have in the BT brand, our best networks and our critical national infrastructure, means there is real potential for business to return to growth and become the most trusted one-stop digital shop for businesses large and small as we help move them into an increasingly digital age. And then finally, just moving to the group as a whole we have had considerable success in reducing our costs. However, as you're well aware we're still far behind our European peers when it comes to productivity and moving forward, this must become a priority. Today, I'm announcing a further £3 billion of gross annualized cost savings over the next 5 years with onetime costs of approximately £1 billion. 80% of the savings comes from a small number of big programs focused on shutting down legacy as we build and migrate our customers to the next-generation platforms and networks; simplifying our products, platforms and customer journeys by moving them to new, more efficient common platforms such as the new EE; scaling the use of fewer shared platforms and deepening our data and AI capabilities to drive growth alongside productivity, efficiency whilst creating much better and brilliant customer experiences. We still expect headcount to reduce from 120,000 employees and contractors today to between 75,000 and 90,000 by the end of the decade. But more importantly this next phase of transformation is also set up to improve customer experience and enable the growth agendas in our CFUs. Without a doubt, the future BT Group will be a simpler, leaner and a better company for all its stakeholders. But let me now hand over to Simon to take you through our final priority and outline the new guidance that we set out this morning.

Simon Lowth: Thanks, Allison. So Slide 21 sets out our performance objectives and capital allocation framework for the group. Execution of the strategy with sharpened focus will deliver enhanced cash flow and returns. As I will set out in our guidance shortly we will see a significant expansion in normalized cash flow over the next two years starting this financial year supported by revenue and EBITDA growth, cost transformation and lower CapEx. We expect to deliver normalized free cash flow of around £1.5 billion in FY'25, around £2 billion in FY'27 and around £3 billion by the end of the decade. The cash flow generated will be deployed in line with our capital allocation policy. Our first priority is to invest in value-enhancing growth. Our second priority is to support our commitments to the pension fund. We agreed the 2023 Trani [ph] evaluation in October last year in which we reconfirmed that we're firmly on track back with our existing funding plan. We'll maintain a strong balance sheet. We're committed to a BBB floor and a BBB+ through the cycle credit rating target and residual cash flow is available to fund returns to our shareholders underpinned by our progressive dividend policy. So we've got a clear set of performance objectives and a disciplined capital allocation framework that will drive value for our shareholders. Moving to Slide 22. This sets out our guidance for FY'25 and beyond. Starting with FY'25, we continue to expect both adjusted revenue and adjusted EBITDA growth with revenue flat to 1% and EBITDA of around £8.2 billion. This is despite challenging macroeconomic conditions, the cost of living challenges and a highly competitive market for connectivity services. In consumer, we expect revenue and EBITDA growth to be weighted more towards the second half of FY'25. Lower equipment sales, a reduced benefit from annual price rises and the base decline will impact performance in the first half. Beyond FY'25, we expect consistent and predictable growth in revenue and EBITDA underpinned by pricing and adoption of next-generation converged products and solutions with EBITDA growth ahead of revenue enhanced by our cost transformation. Our further £3 billion of gross annualized cost savings comprises the completion of the existing programs in FY'25 that will deliver an additional £600 million of cost efficiency followed by transformation programs, leveraging digitization and AI in consumer, business and Openreach. Approximately 40% of the £1 billion cost to achieve will be incurred in FY'25 and the remaining costs will be spread over the following years and we will clearly be running at a much lower annual rate than over the past 5 years. On CapEx, we are reducing our outlook to less than £4.8 billion for FY'25 and '26. That's down from our prior guidance of £5 million to £5.1 billion and this is underpinned by prioritizing investment to our UK connectivity business and above all by CapEx efficiencies across the group. For example, Openreach will build to 4 million premises in '25 at the same total cost as last year's bill to 3.5 million premises and digital have improved software development productivity by about 10% just over the past year. Once we've built FTTP to 25 million premises by December '26, we will reduce CapEx by at least £1 billion a year. Capex will start to decrease in FY'27 with the full £1 billion impact visible from FY'28 onwards. And as just discussed, normalized free cash flow will increase significantly by the end of the decade driven by the EBITDA growth by the CapEx reduction and by broadly neutral working capital. It will be partially offset by increased tax charges towards the end of the decade. Specifically, we will deliver normalized cash flow as I said of £1.5 billion in FY'25 rise to £2 billion in FY'27 and then to £3 billion by FY'30. The confidence in our outlook has allowed us to increase the full year dividend and reconfirm our progressive dividend policy into the future. Overall, our outlook shows our confidence in the business and our conviction that will continue to deliver consistent and predictable growth in value, not only in the long term, the short-term term too. We'll use any surplus cash generated to reduce leverage and provide increased returns to our shareholders. And on that note, I'll hand back to Allison to conclude.

Allison Kirkby: Thank you, Simon. So in summary, we've delivered another solid year of financial and operational progress, proof our strategy is the right strategy. We have a unique position in the world, but we're especially strong in the UK with the potential to become a true national champion, the digital backbone empowering our customers in the country. Our investment into next-generation infrastructure has now peaked and we're inflecting to significant cash flow growth in the coming years. Consequently, our returns are rising. And moving forward, we will demonstrate a disciplined approach to capital allocation and a focus on shareholder returns, a commitment reflected in our increase to our dividend. In summary, I actually could not be more excited about what the future holds for BT Group and all our stakeholders. I see significant growth potential for all colleagues, customers, the country and, of course, our investors as we realize our ambition to become the UK.'s most trusted connector of people, devices and machines. Thank you for listening. I know it's been a bit longer than normal, but we'll now move to Q&A. And given the time available, we would appreciate and the number of people in the room and online -- would appreciate one question per person although I know you're always very good at squeezing in three into one question. So please first question and somebody is going to have to help me. Yes, Hayley, you're going to do that.

James Ratzer: James Ratzer from New Street Research. And Allison welcome and congratulations on the first set of results. So it's very nice to see a UK telecoms company putting up its dividend. So I was wondering if I could just focus on that a bit. The message there is progressive. Are you able to give us any more details around the kind of phasing of that going forward, could that growth accelerate towards the end of the decade as we go into a free cash flow ramping up or can we see maybe in the near term, the kind of 4% growth you just announced actually start to ramp a little bit sooner? Thank you.

Allison Kirkby: So not giving any further guidance now, but the Board remains very committed to our progressive dividend policy, and the confidence we have in the outlook going forward. We're expecting top line growth. We're expecting EBITDA growth to go ahead of top line, because of the efficiencies that we're pursuing. And if you assume that our CapEx is -- has now peaked, and once we're through the once in a generational investment of CapEx in the next couple of years, there will be a significant acceleration of free cash flow. Our capital allocation policy is very clear, as Simon has laid out. And so clearly, as we get into the final part of the decade, there will be some significant cash flow for us to allocate against our priorities.

David Wright: David Wright from Bank of America. Thank you for taking my question. I wanted more than one, but I'll stick. I've got Nick next to me. So just on the CapEx outlook. Clearly, the CapEx number has come down versus previous expectations, but the build volume is the same. So just sort of confirming that dynamic and perhaps digging a little bit into what are the efficiencies that have supported that would be useful. And it is part of the same question, but we'll be the judge of that, so to speak. But you've targeted the 25 million homes, but could that be more than that? What are the opportunities to consider rural build? You've obviously talked about this new opportunity today. And it almost pivots a little bit into James' question on allocation of capital. Are you may be holding back a little, should there be an opportunity to move beyond the 25 million? So I think that's sort of one question.

Allison Kirkby: Okay. One question, but lots in it. So in terms of efficiencies, we are seeing efficiencies across the board. I mentioned particularly Openreach first. Openreach, we're seeing efficiencies in network supplies, having now laid out a much clearer path of how we're built going forward. We've been able to negotiate good rates on equipment, good rates on contractors. We've actually reduced the number of contractors that we're working with, and leveraged that. We're also paying them based on outcomes now, not just based on headcount. And as I touched on in my presentation earlier, we're actually seeing real engineering innovation actually happening in our build as well. And if you've spent time with Clive recently, he will excite you about subtended headends, which is a very exciting topic for Clive. But that and overblowing and how we're managing efficiency in the spine is bringing us real innovation and efficiency. So productivity is improving in the build, and we get lower equipment costs and lower contractor costs. So real efficiencies that's allowing us to keep the pace of build. Outside of Openreach, we're starting to reap the benefits of some of the work that harmonious has been doing in digital. As you know, we restructured our partners in the IT area last year. We're seeing real productivity gains there and she's using AI. In fact, we've been recognized by AWS recently has been quite far ahead in productivity on coding. So we're seeing our development costs. The productivity of coding is now up by 12% in the last year. And then finally, I have stopped some CapEx investment into innovation areas that I did not see us getting a good return on investment in the foreseeable future. And so that whole sharpened focus, is really about focusing around core connectivity in the UK where we can win, where we can succeed. So a good range of efficiency and stopping stuff that won't give us the right returns. And then moving on, do you want to take the second question?

Simon Lowth: Yes. I mean, David, you're asking if once we got to 25 million, we won't have entirely covered the UK, although obviously, as the preferred bidder on lot C, that gives us some additional footprint, which is important for us. In the guidance we provided, which brings our CapEx down by at least 1 billion, that still assumes we're going to continue to build out beyond the December '26-time frame. We will get nationwide with FTTP, and that's built into the plan going forward, okay.

Akhil Dattani: Hi, good morning. It's Akhil Dattani from JPMorgan. Can I ask a question on your midterm guidance, please? I guess the first part is the decision to provide that guidance now, what motivated that? What's the specific reason around timing? And the second part of it is -- it's, obviously, a welcome move given the duration challenge of the story given you're investing today, but the returns are further out. But I guess the question is for investors, the tricky bit is always trying to size all the moving parts, given the unknowns around does Virgin Media wholesale on their footprint, what happens to TalkTalk? So can you sort of help us understand, given what are some pretty sizable binary items, how have you thought about the way in which you've constructed that guidance, so that you can help us understand the confidence there is, to make sure you deliver on that 3 billion at the end of the decade.

Allison Kirkby: Yes. I'll start, and you can always build, Simon. Clearly, it has been by saying all of the upside at the end of the decade has been difficult for both our existing and potentially new investors to understand, what is the trajectory going to look like going forward. And having come into the business, scrutinize the plans, I got very confident, including the sharpening of the focus that we could start to give much more guidance on the cash flow, so that we can help investors understand when they're going to start to see the returns and see that inflection point. And so -- and you only need to believe that you get 100 million of EBITDA roughly every year. CapEx is flat until the end of '26 and then it comes off by about 1 billion, and working capital fairly neutral. And you can see the route to that. In terms of the revenue and EBITDA, you could say they're fairly muted. I think they're fairly muted. And clearly, we're aiming for more than that. But we are entering a period of significant migrations and we've got a lot of new stuff coming to market. We've got the momentum in business to come back. I got very comfortable -- the cash flow and hope we can even beat some of the revenue and EBITDA guidance going forward. As I look at what about the threats from the market, as I said there, we have a 74% market share. We were never going to sustain a 74% market share. That would not have been the outcome that the regulator wanted. Our focus -- we can afford to lose a couple of share points a year, and our focus is just building the best network in as many places as the country as we can. It will be a nationwide network that our CPs will continue to have to rely on in some areas. And the great news is that we got the first two lots of the Type C that takes us into deep rural, where is a heartland for BT, clearly in our retail businesses. So I'm comfortable laying out. We owed it to investor community to give them a little bit of a roadmap, also helps me internally. It keeps people focused on not just the end of the decade, when everything is going to be rosy, but to deliver every year consistently on the route to that.

Simon Lowth: Can I add, Allison, just to perhaps help with a few very visible, predictable numbers to get your head around? I mean, we developed about 1.3 billion of cash flow this year. There are three things entirely in our control as we move forward, which will drive a 1.5 billion improvement. One is we've said we're going to cut our CapEx by 1 billion, that's reported CapEx. And you know how we're going to do that, and you've seen the efficiencies we're delivering. In addition, as you stabilize a constant run rate of CapEx, your capital creditors go away. In addition to that, we have expired through the BDUK grant fund return. So that's another 200 million basically cash Capex that goes away. It's 1.2. And on top of that, in FY'24, you've seen this, we were running with a negative capital -- working capital, and that's to do with some events we've had over the last couple of years. This business can run with neutral working capital. So that's another 300 million. So you got 1.3 this year, 1.5 is entirely in our control. Then obviously, we've got a bit of interest rate pressure, but how we're -- that the debt book will unfold. So the real thing is the growth in the EBITDA. And we've told you about the gross annualized savings. We talked to you earlier about 0.5 billion of net OpEx improvement. And I also mentioned earlier that we still have cumulative tax losses benefiting cash tax into the early next decade. So hopefully, that gives you a bit more of an understanding of the controllable parts.

Allison Kirkby: Should we take a question from somebody online now?

Mark Lidiard: Thank you. Our first question online comes from Adam Fox-Rumley from HSBC. Adam please go ahead. You are now unmuted.

Allison Kirkby: Hi, Adam. Maybe you're not muted. Should we go back to the room? Well -- yes. Let's go to the room and we'll go back to Adam. Sorry Adam

Polo Tang: Hi, it's Polo Tang from UBS. Just a follow-on question. It's on Openreach because you called out competitor line losses continuing at a similar rate with the potential for losses to be worse if the market does not recover. So does this mean that you're expecting 500,000 per annum in terms of line losses, going forward? And if line losses are continuing, does not actually make us to accelerate the build beyond 4 million per annum. Is this not the best offense rather than trying to boost your free cash flow near term. So if you could just maybe talk about line loss trends? And do you expect it to inflect? And how do you expect it to evolve?

Allison Kirkby: Yes. We -- as I said, we're considering a housebuilding, is likely to be even lower this coming year than even last year. And life is not any better for the consumer at the moment. We don't expect the market to recover. And so the market is likely to decline a little bit again, this coming year. So we're actually expecting competitor line losses to be moderately higher than this past year. And looking forward though, we expect that to improve when the market improves. In terms of your challenge, why don't you build faster, to build at a rate of 1 million a quarter and 4 million a year is actually pretty full on, without it starting to become inefficient. So we are choosing to go as fast as we can, as efficiently as we can. And honestly, if we throw more CapEx at Clive at the moment, we probably wouldn't be able to do more with it. But it's great news on the BDUK award, because that helps us get into some of the rural areas faster. So we'll be moderately higher than 500,000 this here, but the market will recover house building will pick up again. Broadband adoption will pick up again, and then we will be back below that level. But for the foreseeable future, it will be moderately higher.

Polo Tang: Just to clarify. You expect persistent line loss, you say recover, is that just a reduction in the rate of the decline?

Allison Kirkby: Until the build stops from the old nets. We always expected a couple of points a year. But where we're building, we're growing our lines. So in the areas where we have not had high-speed broadband before, we're growing our market share and we're growing our lines. And we're almost halfway through the country now. We'll continue into the other half. And that will allow us to get into some of those areas where Openreach is not yet built high-speed broadband, and the BT UK investment and some of the voucher schemes that come will allow us to ramp that up, but it will all be within the 4 million per year. So we're very happy with our plans. The 2% a year will come down at some point. And actually, what we're seeing is some of the competitor build has slowed and there's a bit more focus on connections at the moment, but we are market leading in terms of connections at a 34% take-up rate.

Georgios Ierodiaconou: Hi, good morning. It's Georgios Ierodiaconou from Citi. My question, and thank you for providing the broadband retail base pretty useful. My question is on the retail business and the decline that we've seen in the last year, both in mobile postpaid and broadband. I appreciate you mentioned the processes that you're going to change to improve customer experience, but those tend to take time. So I was wondering if there is anything more structural that you're thinking. I know you mentioned convergence, but if I could ask, is there any ideas about launching family plans a bit more decisively, second brand being used more actively, anything around back book price increases perhaps changing in terms of structure versus your predecessors? Thank you.

Allison Kirkby: Thank you. Yes, on purpose brought in the base into how we measure the business going forward, you need to keep an eye on our customers. If we're going to be customer focused, we need to be ensuring that we're actually either maintaining or growing the base. A couple of things you should understand, the mobile postpaid base. We proactively discontinued the Plusnet mobile business, during the course of last year. And we'll be deprioritizing the BT Mobile business as well. That Plusnet base was around 400,000 customers and some of the ARPUs were as low as 4x or 5x. So we decided Plusnet has a role to play in the broadband market. But we did not want to be playing around with a 4 or 5 ARPU mobile business in Plusnet. So that's why you've seen -- it was a proactive shift on the mobile base, and we're planning to stabilize and grow that base again. On broadband, it's basically a reflection of the market, less house build, broadband adoption, growth having slowed or even in decline because of the consumer squeeze. And also, we've been getting ready for the migration to the new EE, that -- we only launched it in October. We are basically migrating as Mark likes to say, the equivalent of Wembley Stadium a week in terms of customers. So we've already got more than 400,000 new EE broadband customers that have a higher propensity to sell other products from us, to buy other products from us. The elevate proposition, is a converged proposition that allows to sell family plans on the back of a household broadband. And that, we are now just really in the last few months set up to be able to take advantage of the new EE. We're also putting non-EE subscribers onto the EE ID platform. We now have almost 10 million customers registered with EE ID that might -- that don't necessarily buy an EE connectivity subscription from us today, but the minute they buy a tech product from us and we're the biggest seller of gaming consoles in the U.K. at the moment, then we're able to then cross-sell and upsell to them. So we're plan to do all of what you said. We're looking after a base, we're going to be driving convergence on the back of our core connectivity. We've got WiFi 7 launching just after the summer, and you'll see a lot more on convergence. On the second brand, BT will continue in the market for quite some time. We're -- it's going to be around as long as we've got the PSTN and we're still talking about EE powered by BT for now. And Plusnet plays a very important -- it's -- we have 1 million subscribers on Plusnet, a very loyal set of subscribers. And it's a really important brand in this period, where the consumer is feeling a little bit squeezed. So yes, that gives you some insight on how to understand how we feel confident about the base growing, convergence growing and how we'll play the different brands going forward.

Carl Murdock-Smith: Hi, I am Carl Murdock-Smith from Berenberg. Firstly, I just want to take a second to wish Mark Lidiard a happy retirement. And also to wish Mark Smith a happy birthday. I can't think of any way he'd prefer to spend his day. I wanted to ask about how you engage and incentivize your employees? So specifically kind of the balance between LTIPs and RSPs. So BT moved away from an LTIP towards a restricted share plan in 2020. Part of the logic around that was with rising CapEx, was it right to incentivize and bonus people on free cash flow metrics? Obviously, now with, as you say, past peak CapEx, do you restrict to share plans, therefore, still remain appropriate or should BT look to move back towards a traditional LTIP structure, as free cash flow progression becomes more important over the next few years? And apologies, I know this is more a question for the Rem Committee than you guys. But I suppose I'm asking not for your pay, but more for how do you incentivize your staff towards these targets?

Allison Kirkby: Yes, incentivization of staff, clearly very important. And actually, it's one of the biggest asks I get on employee calls is when are you reintroducing share save Allison. And it is definitely my intention to be able to reintroduce Share save once Simon gives me the capital to do so, but he's very tight on his projects. No, we want to encourage more share ownership in the population. What we agreed with the Remuneration Committee this year is having just arrived in February, we wouldn't want to make any changes to the current structure of our remuneration, but we would use the next 6 months as we really sharpen down on the strategy, the key priorities, what does the accelerated transformation look like, over the next few years. We've got the broad outline at the moment. We know what it looks like financially. But we're thinking how do we really incentivize our employees against delivering and actually beating that what will be the real enablers to a better BT in the future? So we've got a number of things that we're discussing with Remuneration Committee. We've not really touched on whether we move away from RSP or traditional LTIP at the moment, but we are looking at how do we in our annual bonus metrics have something that is better linked to being on track for multiyear consistent delivery and growth. Because at the moment, it's very in-year, and that's something that we're in dialogue on.

Steve Chesney: It's Steve from Redburn Atlantic. Nick has kindly said that I could have 10 questions. So I just want to come back to the sort of market and the fact that it's declining because I take all your points on board, but it's still quite unusual. There are other countries where housing construction has fallen, unemployment is still pretty low in the country. So I'm just sort of curious as to why you think it's moved from growth to decline, and what the triggers are for it to start regrowing? And is there any risk that doesn't happen, if we got an employment rising and things like that. So just what would happen if it didn't grow? And would you take a mean action you didn't see a recovery in market volumes? And just a quick add-on on BDUK. Great news on Type C, but you didn't seem to better at all than the regional markets. I think you won some like £25 million of contracts. Was that just a sort of either-or decision in terms of capital allocation? Or are there any reasons why you didn't take part in those tenders. It'd be interesting to note. Thanks.

Allison Kirkby: So on Type A and B, we chose not to participate. Those were areas, they were very -- some type areas of 10,000 homes very regionally focused. There was a lot of competition, and we recognize that actually we were probably better set up to be more successful in Type C. And so we chose not to be in Type A and Type B.

Steve Chesney: Can you go into Type B? If you were in the Type C, are they completely discrete in terms of the homes allocated?

Allison Kirkby: If those that one Type B do not actually build. So you're actually seeing that some that one, not even started to build yet. Then clearly, that would be something that we could probably discuss with BDUK and the regulator, if we could help pick those up. And that's our intention. In terms of market growth, economically, the consumer is squeezed at the moment. It's not -- it's tough out there. And therefore -- and there was a real growth in broadband lines, broadband adoption during COVID. There will be a settling down, whilst the economy stays where it is, but broadband growth pick up again. As everybody increasingly needs to do everything digitally and online, it will come back. Do I worry about? We'll just need to adopt our plans if the market was continued to decline, but I don't think it's going to decline. And we've got a responsibility now, to ensure that we're capturing the value of these next-generation networks that are giving a much better experience to our customers, and actually drive the value of the services and drive the value of the market even if there's no volume growth in the market over the foreseeable future.

Simon Lowth: I'd just add a couple of things, Allison. One is that don't forget, I mean new house build is half the rate it was just 2 or 3 years ago. And I think any government in the U.K. that is going to be a major priority for them. And we do believe that will come back. The other factor is the broadband penetration in the U.K. at sort of 83, 84 is still well below most European benchmarks. So we think there's a lot more opportunity for overall penetration of the growth. So there's a couple of other facts that give us confidence, the question to Allison's point is exactly when that starts to recover, but it will.

Allison Kirkby: But when we get into areas where there hasn't been high-speed broadband or mobile connectivity, we see dramatic increase in our revenue and digital adoption. Parts of the highlands and islands of Scotland have been transformed, thanks to us building out Openreach and building mobile. And we're ahead of our peers on the shared rural network from a mobile point of view, we see immediate uptick in subscriptions and the type of subscriptions our customers buy from us. So we just need to keep doing that. And then we go to the table behind.

Andrew Beale: It's Andrew Beale from Arete Research. Just a quick question to understand what focus on the UK means financially? I mean what is the scale of revenue EBITDA CapEx that we're talking about? What does it mean for customers as you shift away from those operations? What does it mean for management time or distraction? And how much are you going to get back from doing that?

Allison Kirkby: Yes. So I think we've been quite clear that, that revenue that is now global, once we took out -- because originally Global included a lot of U.K. domiciled multinational customers, and all of our securities planned products and services, even if they were sold even to the British government. So the global piece is about 2.5 billion in revenue. And if you take the average margin of our business portfolio, that I would say it's about an EBITDA of about 0.5 billion, but it's probably very neutral when it comes to cash flow. It probably doesn't really add a lot from a cash flow point of view. What do we mean by -- what it means for our customers? We're just announcing it today. We've got some small M&A activity that has been ongoing for a while. But we've only just announcing today that we're exploring all options for that business. It will take time. We don't have any answers yet. But by announcing it, I can now put a dedicated team against it, that are focused on protecting that customer base and seeking, for example, to find interesting partnerships, that could allow us to really leverage the global fabric product that I mentioned earlier, because we see that segment as ripe for consolidation and we're ready to engage in the consolidation opportunities that can occur from that. In terms of management time, it will allow me to have a dedicated management on that, so that I can dedicate the rest of the business organization on the UK because it's still too intertwined today. I want that dedication to get growth back in the UK and that's the way we see it forward. But it will take time, and I don't have all the answers today, but it's fairly neutral to overall cash flow. After this one, we'll do one question online.

Karen Egan: Thank you. Good morning. Karen Egan from Enders Analysis. Thank you for a great presentation. I just had a question regarding BT Consumer. I think you're quite clear about the pricing pressure in the first half of the year because of the lower contact price increases relative to last year. But I'd be interested in more detail on how you see that recovering in the second half of next year and into 2026?

Allison Kirkby: A lot of it is timing. You've got 2 years of very high compounding rates on those that have been in contract -- coming out of the contract period and the market -- the front book has not moved at the same rate. So as we -- as our customers come out of contract, we need to recontract them at a level that is more equivalent to what we see in the marketplace at this point in time. That fades out over time. And clearly, we start to get the benefit of our latest price increasing that we just put into the market. And then we have the benefits from convergence and really the take-up in new EE. As I said, it's building momentum very well. It comes with a higher NPS. It comes with a higher convergence and therefore, it's coming with a higher ARPU. And that's why we have more confidence in the second half of the year than the first half. We've also got a new WiFi 7 product that we're launching after summer, and that comes with a higher ARPU as well. So we've got a number of things that gives us the confidence in the second half. It's just really about the phasing of those coming out of what was an 11.9% and a 7.9% price rise. Should we do online?

Mark Lidiard: Thank you. For our next online question, let me introduce Robert Grindle from Deutsche Bank. Robert, please go ahead.

Robert Grindle: Hi, there. Can you hear me okay.

Allison Kirkby: Yes, Robert. Hi.

Robert Grindle: Sorry to not be there in person. Kudos to Openreach for continuing to do more with less. My question is, is there an upgrade path to the symmetric and higher broadband speeds that your competitors are using within the higher -- within the lower CapEx outlook and on what timeline? And I have a point of clarification rather than a question for Simon. I heard that no tax -- no cash tax until full year '28, and then just incremental after that comment within full year 2030 guidance. Is that a comment about net taxes, including when you get some tax back on the pension top-ups? Or is that an excluding pension tax refunds? I assume in full year '28 there are no tax refunds.

Allison Kirkby: Thanks, Robert. Listen, we'd love to have more of Clive everywhere driving more for less, and that's certainly our plan for how we'll manage CapEx going forward. On the broadband speeds, our next opportunity to upgrade broadband speeds is with our new WiFi 7 product, and everything we're doing with the new routers in the home. And we have some quite new innovation coming in our Ethernet product as well, to start to provide upgrades there. So we definitely have speed innovation coming to keep us competitive in the market. On the tax question, Simon?

Simon Lowth: Yes, Robert. What I said was that we were paying no UK cash tax I said for the next 3 years to FY'27. We do start to pay -- the UK cash tax does start to kick in, in FY'28, but we still have significant benefits of the cumulative losses. So those still run through into the beginning of the next decade. And that's at the UK cash tax level. There will be a little bit of a pension sort of tax shield, which will mean the normalized cash flow can be a bit higher. But really, the growth in the cash tax starts for the UK perspective into the next decade. Nick?

Nick Lyall: Yes, morning. Nick Lyall from Bernstein. Can I ask one on Openreach as well, please? Some big staff cuts in the fourth quarter. Did those carry on for the next few quarters as well? Is that the copper base starting to get cut down. So -- and could you also explain, maybe how that offsets versus the staff salary rises? I'm assuming Openreach is quite affected by the double salary rise in the first half of the year. Thanks.

Allison Kirkby: Shall I start and you continue?

Simon Lowth: Sure, go ahead.

Allison Kirkby: Clive is basically getting ahead of himself. He is planning on what are the engineers he will need over the coming quarters and years, and is just getting on with. And it's through a voluntary scheme and we're getting good take-up on that. So he's slightly ahead of plan. It will probably slow down as you come to the end of fiscal year '25 for a bit. And then do you want to answer the question on?

Simon Lowth: Yes, certainly. So you are right that in FY'24 versus '23, we did have quite a significant headwind from pay awards because you'll recall, we gave a pay award in January '23, and then another in September '23 and those clearly had an impact in Openreach. We've largely offset the pay awards with productivity, and through the benefits of the cost transformation. And obviously, as we move into FY'25, that pay award effect is sort of annualized out.

Allison Kirkby: We should try and get Adam back on the line at some point. But Andrew -- sorry, that was very rude of me. You put your hand up.

Jakob Bluestone: Jakob Bluestone from BNP Exane. I had a question just if you could maybe share some of your thoughts on some of the, I guess, long-running BT debates around the portfolio. What are your thoughts around things like open read monetization, consolidating outlets? Are there other things aside from the U.K., which, I mean, you've mentioned obviously investing for growth? Are there other adjacencies you're interested in, other than the U.K. specific point? Are there things you're looking to exit? So just if you could maybe help us understand as a new CEO, how do you think about some of these I guess, slightly longer running debate, which Simon has been answering questions on for many years?

Allison Kirkby: I'll give it a go, see if I answer it in the same way. Clearly, the first portfolio decision was global. We've made that very clear. We have also, and I referenced earlier, we're really focused on core connectivity and close to core services that we can aggregate and integrate with connectivity. And anything else we have stopped or put on hold. In terms of the portfolio, we get some towers, they're mixed up in MBNL, and maybe, there'll come a time in the future for those, but it doesn't make sense for us to do anything at the moment, particularly considering the potential merger in the market. And then in terms of Openreach, listen, our first priority is not to distract Openreach away from building fiber faster, further and more efficiently than anybody else. And it's our responsibility as a management team to get the value, the true value of Openreach, once it's through the build reflected into the share price. And so it's not my intention to distract anyone away from doing anything on Openreach. Obviously, I should never say never, but my first intention is to get the true value of Openreach reflected in the share price. And then everything else, cabinets, exchanges, towers, they're always on the list. And if it makes financial sense, we'll do it. But at this time, our priority is non-UK footprint and shutting down some of the innovation that we didn't see was close enough to core. I'll then take Morris, Andrew and then we need to go back to the line, yes? Sorry, online before we do. Adam's now dialed back in, has he?

Unknown Analyst: [Indiscernible] The consumer convergence has got a broad guidance for the end of the decade towards 30% to 50%. Can you give some sort of further guidance as to what the kind of trajectory you're expecting? And is it linear or back-end loaded?

Allison Kirkby: It's fairly linear now that we've got the EE platform that we can really push convergence, and it's a broad range because we want to ensure we drive convergence in a value enhancing disciplined way and convergence comes in different forms. So -- but as you can see, it's now a key priority for us, and we'll be reporting on it more regularly, even when it's a bad quarter, we'll still report on it because we're actually incentivizing everybody to go after it. Okay? So we'll try and squeeze two more in, right? Maurice and then Andrew.

Maurice Patrick: It's Maurice from Barclays. If I could ask a bit on the timing of B2B recovery. So we've been accustomed to lots of hockey stick recovery as a B2B for many years, so many BT Group and divisional CEOs. So try the same question to you, Allison but you seem more confident sense in terms of the timing of legacy declines easing off on some of the growth areas coming through. So I guess is March '25, the bottom of enterprise EBITDA and revenues.

Allison Kirkby: I think Bas and the team set out a very clear guidance at their business briefing back in November, which had revenues starting to neutralize in '25, '26 and EBITDA still being a little bit soft over '25, '26 before recovery. I'd love to beat that, but I think that is still our guidance at this time, Morris, and it's the right -- and that's very much reflected in the guidance that we gave you earlier. Andrew?

Andrew Lee: It's Andrew Lee from Goldman Sachs. Just coming back to your statement or your comment a couple of questions ago, Allison, on trying to get the value into the share price, which is key. And clearly, the market doesn't believe those mid- and long-term free cash flow guides. Otherwise, even after the 10% rally, the shares would be a lot higher than they are now. And today, you provided us with clarity on the CapEx. So now the debate moves even more to EBITDA. And I just wanted to ask a question around EBITDA. So really just trying to understand your structural outlook for EBITDA growth over the next few years. But we saw in the fourth quarter, even ex the one-off, 4% EBITDA growth in Openreach is all Openreach specific. What was going on there? And then could you talk us through the puts and takes, or tailwinds and headwinds on Openreach EBITDA growth going forward versus the 7% you delivered in FY'24. I think you've got the positives of kind of better revenue growth mix from Equinox 2. You've got more cost efficiencies. I think negatives are clearly greater line losses and the fiber net ads appear a little light than they were, and then maybe neutral is inflation. But I wonder if you could just talk about how you see things going from there.

Allison Kirkby: I'm going to give you a very high-level answer because we're running out of time, but I'll try and then we can maybe take it offline. There was a number of one-offs in the fourth quarter. There was the Openreach one-off. There was the business one-off. If you strip both of those out, we were broadly in line with the consensus. And broadly, in like we were about -- group EBITDA was about 2%, whereas the last two quarters have been 3% growth. As I look forward, clearly, we have about a quarter of our revenue is index linked and all of that is an open reach. As CPI comes down, you don't get quite the same flow through to EBITDA going forward. So that particularly impacts our consumer business and our Openreach business going forward. But it's absolutely our ambition through migration of customers to next-generation networks, and the ongoing cost efficiency program that we will grow EBITDA ahead of revenue. But because of lower index linkage, that revenue development might be a little bit softer in those areas that get tailwind from that, as we move into this year and the coming years. But we want -- I want more net benefit from this next 3 billion of cost transformation that we got in the last 3 billion because a lot of that 3 billion was eaten up by significant inflation that nobody had predicted. So it's really my ambition to get more net going forward than we had, and us to do a very good job on the transformation and getting our customers onto new products and services that they want to pay for. And was there anything else?

Simon Lowth: No, I mean the only thing I'd add, Allison, is I think we, -- the point we've made many times, but BT today is running duplicate copper fiber networks. We're running some duplicate legacy and new IT. Going forward, we will move to the next generation. There's a chunk of fixed cost, which is essentially supporting yesterday's network and IT. And over this five-year period, we have broken the back of that, and that will make a significant contribution to net EBITDA expansion that we see and indeed the cost transformation.

Allison Kirkby: In the last year alone, our digital team already shut down half of the 2,500 legacy platforms they were running in business. They're still more than 1,000 to shut down. And that's kind of the complication that we still have. We're still running an old mobile stack that is not fully part of the new converged experience for EE as well. So this double running will go the sooner we migrate our customers, and that's where we'll get the net benefit. I think on that point, we need to close. And I think the final words haven't you to say?

Simon Lowth: I did. But actually, Carl sort of rather jump, but I'm going to pretend I didn't hear that because what I...

Allison Kirkby: This is your opportunity to shine, Simon, and make somebody else shine.

Simon Lowth: You've really raised the temperature.

Allison Kirkby: I've raised the temperature.

Simon Lowth: So actually, listen, thanks very much indeed for coming on for our full year results. And Allison, great to have you. And for your first one. Well done.

Allison Kirkby: That's my feedback

Simon Lowth: Yes, no Mark, we're going to miss you. So it's -- Mark is retiring. In fact, he goes out the door today or tomorrow, is it Mark, I'm not sure. So anyway, we're going to miss you. Thank you for an absolutely extraordinary contribution to BT over the last 7 years. It's been really appreciated. I miss you as a colleague. I know the group will. And indeed, I think some of your friends here might as well. So we wish you well in whatever the future holds. Thank you.

Allison Kirkby: Thank you, Mark. And on that, I wish you all a good rest of the day, and thank you for listening and engaging so well today. Thank you.

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