BT Earnings: Openreach Line Losses Reduced and Remain the Key for 2027

Key Morningstar Metrics for BT Group

• Fair Value Estimate
  : GBX 230
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : None
• Morningstar Uncertainty Rating
  : Medium

What We Thought of BT Group’s Earnings

BT delivered flat year-on-year adjusted revenue growth and a 1% decline in adjusted EBITDA, reaching £4.3 billion and £2.0 billion, respectively.

Why it matters: Openreach broadband line losses remain a key indicator to watch, as any improvement on this front could raise Openreach revenue and EBITDA beyond current expectations for fiscal 2027. Broadband line losses were 192,000 this quarter. Annualizing that run rate would point toward 768,000 broadband line losses in fiscal 2027—ahead of BT’s 800,000 guidance—although trends could swing meaningfully as the year unfolds.

• Next quarter will be key to watch, as it will tell us whether the current pace can be maintained. Trends have varied in previous years, with broadband losses accelerating 43% sequentially in the second quarter of 2026, while they decelerated by 8% in fiscal 2025. In the meantime, BT’s fiber-to-the-premises takeup rate reached 40% this quarter, up from 38% in fiscal 2026.
• The current news flow reads well for BT, as many subscale alternative networks continue to face challenges. Last week CityFibre proposed reducing 200 roles, or 14% of its headcount, in response to near-term growth challenges. Financial Times reported that private equity firms KKR and Warburg Pincus have explored selling or merging their UK broadband businesses. Every subscale altnet that struggles means less competition for BT. Altnets’ consolidation would also be a net positive, as it would allow for larger scale and less price competition.

The bottom line: We maintain our GBX 230 fair value estimate for no-moat BT. Our fair value estimate implies a forward enterprise value/EBITDA-after-leases ratio of 5.6 times. Cost controls remain paramount to deliver on its £8.2 billion-£8.3 billion EBITDA 2027 guidance. We don’t have too many reservations on this front because, since fiscal 2024, BT has delivered, cumulatively reducing operating costs by 13%.