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Hello, ladies and gentlemen, and welcome to BT's Quarter 1 2018/2019 Trading Statement Conference Call for the first Quarter ended 30th of June, 2018. My name is Sunny, and I'm your coordinator for today. [Operator Instructions] I would like to advise all parties that this conference is being recorded today. I'll now hand over to Mark.
Thank you, Sunny, and welcome, everyone. My name is Mark Lidiard from the BT Investor Relations team. Presenting on today's call is Gavin Patterson, Chief Executive. Also, on the call today for Q&A is Simon Lowth, Group CFO; the CEOs of our customer-facing units and other executive committee members. Before I start, I'd just like to draw your attention to the usual forward-looking statements on Slide 2 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 slide and the annual report can be found on our website. With that, I'll now hand over to Gavin.
Good morning, and thank you for joining us for today's call. It's certainly been a busy first quarter. Shortly after our full year results and group strategy update, we started with the launch of our new consumer strategy, and we've seen some really positive progress. We have also launched new products and services across our Enterprise businesses. Openreach has continued to expand its ultrafast network, and we've seen some positive progress on the regulatory front with the DCMS Future Telecoms Infrastructure Review and with Ofcom's full fiber implementation plan. Openreach also announced its wholesale price discounts earlier this week to incentivize CPs to drive take-up of our superfast and ultrafast networks. And although it's just a short time since we launched our updated strategy, I'm very pleased with the progress in all areas: customer experience, network investments and on transforming our operating model. I will cover these points in more detail in the presentation, but I'd like to start by giving you some of the key financial headlines for the quarter on Slide 4. On the financial front, we have made a good start to the year delivering in line with guidance, and we're confirming no change to our outlook for the full year. As you know, this is the first quarter that we are reporting under IFRS 15. As a result, the prior year's numbers, where we give a year-on-year impact, are unaudited IFRS 15 pro forma figures. Revenue for the first quarter was GBP 5.7 billion. While 2% down overall on last year, we saw continued growth in Consumer. This was offset by regulated price reductions in Openreach and decisions in our Enterprise businesses to move away from lower-margin business, plus some legacy product declines. Adjusted EBITDA was up 1% to GBP 1.8 billion. This was due to a strong performance in Consumer and cost savings across the group, partially offset by the decline in revenue and investment in improving customer experience, and to support the recruitment drive for new engineers in Openreach. CapEx of GBP 839 million was broadly flat and includes fixed network investment of GBP 428 million, which was down 1% on last year with the majority of the Mobile investment under the ESN program now complete. Normalized free cash flow of GBP 507 million was down 9%, mainly due to the increased cash capital expenditure, partly offset by the timing of working capital movements. Net debt was GBP 11.2 billion at the end of the quarter, GBP 1.6 billion higher than at the 31st of March, with the increase driven by the issue of GBP 2 billion in bonds to the BT Pension Scheme, offset by reported free cash flows. As a result of the bonds and the reduction in liabilities, there was a corresponding fall in the IAS 19 pension deficit to an estimated GBP 3.9 billion net of tax. However, the reduction in the deficit was partly offset by the correction of an error made by our independent external actuary in their calculation of our IAS 19 deficit at the 31st of March this year. In light of this error, which amounts to around GBP 0.5 billion, or less than 1% of the total pension liabilities, we intend to restate our 31st of March 2018 balance sheet and statement of comprehensive income in this year's half-year report and next year's annual report. To be absolutely clear, there is no impact on our P&L, to cash flow or to the 2017 funding valuation and recovery plan. In May, we laid out our strategy and plans for the next 3 years, focused on leadership in converged connectivity and services. Key to success will be the delivery against our 3 core pillars: to deliver differentiated customer experiences, to invest in integrated network leadership and to transform our operating model. I would now like to update you on how we're performing in relation to these pillars. Moving to Slide 6. Our investments in customer experience continue to have a positive impact across the group. Group Net Promoter Score continues to improve, up for the eighth quarter in a row, and our Right First Time metric was up 3.1% versus the '17/'18 baseline as we continue to improve the consistency and quality of our service. Openreach delivered its best quarter in terms of on-time delivery, on-time repair and provision lead times, and missed appointments for voice and broadband remain low. The performance benefited from our ongoing proactive fault reduction program. Reduced faults, improved service and the increasing use of digital channels means that we are seeing fewer service calls into our contact centers, down 10% on last year. Those who are calling are seeing reduced average waiting times, business customers are seeing wait times down by 1/3 to 44 seconds, and EE and BT Consumer customer wait times are both down by more than 50% on last year to 37 seconds and 34 seconds, respectively. We saw an 8% increase in the use of eChat for BT Consumer customers and have seen 2.5 million customers download the My BT app and around 11 million download the My EE app. The My EE app is the most downloaded mobile operator app in Europe and now includes click to call, connecting customers to our call centers directly from the app, enabling automatic customer authentication. We'll continue to drive the use of digital products to improve customer experience and to drive efficiencies and cost savings. Ofcom complaints data continues to improve. For the January to March period, on mobile, EE complaints are down 25% year-on-year to a record low; and on broadband, complaints are down across all brands, 32% for BT, 46% for EE and 20% for Plusnet. We still have a lot to do to improve service delivery, but we continue to move in the right direction. The other aspect of differentiating customer experiences is through the improved products and services that we deliver to customers. Now Q1 was a busy period for this, particularly in Consumer. Most importantly was the launch of BT Plus, our first Consumer converged product with our Keep Connected guarantee, bringing together fiber and 4G to give customers the best connection in and out of the home. We're focused on up-selling to existing customers with over 100,000 sales in the quarter. For the EE brand, we launched smart number technology, which means you can use the same number across multiple devices. We launched mobile data gifting between family members and EE-branded ultrafast broadband plans. At the beginning of the quarter, we launched 4G Assure to the business market, delivering business-grade broadband that automatically switches to 4G if there is an interruption in the fixed service. Early take-up primarily to existing customers has been promising and is having a positive impact on ARPU. And more recently, we have upgraded the BTnet product for our SME and corporate clients. This is a dedicated IP Internet service delivering a standard Wi-Fi, guest Wi-Fi, LAN and cloud update and has a built-in security option to protect customers from cyber attacks. And finally, in Global Services. We launched BT Connect Cisco's SD-WAN, which expands our digital network solutions, and we announced that we are collaborating with Microsoft to accelerate cloud adoption with Microsoft Azure, which adds to our existing collaboration with Amazon Web Services. Moving now to our second pillar around integrated network leadership. Openreach continues to accelerate the deployment of FTTP and is now building to around 10,000 premises per week. Openreach has created a single network build team covering Business and Consumer, resulting in improved efficiency delivery. Exeter has been announced as our ninth Fibre First city, and we remain on track to reach our target of 3 million FTTP by the end of 2020. Current deployment costs are coming in at the lower end of expectations. To encourage the increased take-up of its superfast and ultrafast network, Openreach earlier this week published pricing discounts for volume commitments. The offers cover a number of tiers to ensure that all CPs can participate. This should drive improved ARPU for Openreach, stimulate the superfast and ultrafast market and increase the average broadband speeds across the country. We welcomed the publication of the DCMS Future Telecoms Infrastructure Review, in which the government set a clear course to accelerate improvements to the UK's digital infrastructure. We want to think carefully about each of these specific recommendations, but we think this is the right ambition with the right focus on driving commercial investment through both competition and regulatory reform. BT is already investing in 5G and FTTP, and we want to invest further and faster across the country. But to do so, we need to be confident to making a fair return. While the government's framework should allow that, the regulatory details will be crucial. Ofcom's full fiber implementation plan is, therefore, also a welcome step forward. This is the right time to look afresh at regulation of fixed access markets. The regulatory regime to date has been very successful in promoting retail competition, but the investment challenge the U.K. now faces requires a different approach. We therefore, welcome Ofcom signaling a flexible approach to regulation in different parts of the country, deregulating where competitive pressures emerge. We hope to see regulatory reform that supports greater investment and provides the clear, predictable and transparent long-term framework that investors need. And we will now look forward to discussing all of this with Ofcom and industry partners. On the Mobile side, as we announced at the full year results, we purchased 40 megahertz of 3.4 gigahertz spectrum during the quarter for 5G. We will be launching the UK's first live 5G trial in October with the upgrade of 10 sites in East London and remain on track to launch 5G next year. We're looking at opportunities for fixed wireless broadband solutions as well. We continue to expand our 4G coverage and EE was, again, ranked #1 or joint #1 in all areas of RootMetrics. EE also won Best Consumer Network, Best Business Network and Most Innovate Service in Mobile Today’s Industry Awards. Finally, I will cover progress with transforming our operating model. On simplifying our operating model, we now have the leadership team in place for the new Enterprise unit, and we remain on track to integrate Business and Public Sector with Wholesale and Ventures into one unit from the 1st of October. In Openreach, we have made significant progress with the implementation of the DCR. We're continuing with this process and have now commenced the consultation to transfer some 31,000 employees into Openreach, which we plan to complete by the 1st of October. We've also made progress with Group Business Services, which provides shared services across BT. GBS will help build -- help drive business growth and allow us to achieve significant quality, service and efficiency gains. GBS will operate through a network of shared service centers and will drive simplification, standardization and the automation of end-to-end processes. Our 3-year transformation program is underway with almost 900 role reductions in the period, primarily in global services and support functions. This was offset by new hires in Consumer and Openreach as we invest in the resources needed to improve service and for scale FTTP deployment. We continue to expect a net year-on-year role reduction by the full year. And finally, in July, we reached agreement on the sale of our Cables business. The sale is in line with our strategy to sell small noncore business. Moving on now to the performance of our customer-facing units. Looking at Consumer on Slide 10. This is the first time that we are presenting combined results for BT Consumer and EE. Revenue was up 2% on last year to just under GBP 2.6 billion driven by increased sales of high-end smartphones, growth in SIM-only base and improved revenues from BT Sport, only partially offset by lower Solus voice revenues following our voluntary agreement to reduce prices. Fixed ARPU for the period was up 1% driven by higher sports and TV revenues, and postpaid mobile ARPU was down 1% driven by an increase in the SIM-only base. Churn remains low across both fixed broadband and postpaid mobile. Operating costs were flat, leading to EBITDA of GBP 610 million, up 10% on last year. Although I should note, we expect to see higher sports rights and device costs later in the year. During the quarter, Consumer launched its new strategy at our first business briefing. The strategy to be the U.K. market leader in convergence focuses on 6 key enablers, including: leveraging our 3 great brands, creating one small network, giving the best personal and local service, personalizing through the use of data and digital channels, being the best for partnerships and offering unrivaled choice for content through our open super-aggregated TV platform.BT became the first major U.K. pay-TV provider to offer Amazon Prime Video via the set-top box, and we now sell BT products through the majority of our EE stores. In the quarter, we won one of the remaining Premier League packages. So from next season, we will be showing 52 games per season at a cost of GBP 975 million over 3 years. We've got off to a great start with the launch of BT Plus, EE smart number and our partnerships. We're only a few weeks into the launch of some of these services, but the initial indications are very positive. Looking at Business and Public Sector on Slide 11. Revenue was down 4% to GBP 1.1 billion, driven by lower equipment sales, continued decline in traditional voice products as the market moves to IP, and the impact of the EU roaming on mobile. This was partly offset by continued growth in mobile volumes, IP and networking. EBITDA of GBP 350 million was up 2% on last year, driven by lower operating costs and other one-off cost benefits. Excluding these one-off benefits, EBITDA was broadly flat as expected. Encouragingly, the impact of the loss of Public Sector legacy contracts is now largely behind us, and we are seeing the positive benefits from the regionalization of our sales force. And we continue to grow our business mobile base. The graph on the right shows how the data networking space is transitioning to IP. As you can see how the new IP-based WAN services are replacing legacy TDM-based private circuits, overall delivering broadly flat data networking revenues. Turning now to Wholesale and Ventures on Slide 12. Revenue was down 8% to GBP 459 million, mainly driven by traditional voice products and Partial Private Circuits, reflecting market decline and markets -- and customers migrating to newer technologies. EBITDA declined 11% to GBP 154 million, reflecting the reduction in revenue. In Ventures, there was encouraging growth, including a 63% increase on prior year messaging volumes. Turning to Global Services on Slide 13. Global Services revenues were down 8% to GBP 1.15 billion, primarily due to actions we are taking to move away from low-margin business. EBITDA increased to GBP 95 million for the quarter, mainly reflecting a prior year bonus true-up and the lower labor costs from ongoing restructuring across the division. We're continuing with the transformation of Global Services. In line with our focus on global MNCs, earlier this year, we transitioned all globally managed accounts into a unified structure and we are now aligning the structure around 3 industry verticals: banking and financial services; resources, manufacturing and logistics; and TMT, healthcare and business services. We're also creating a new unit to provide the full range of sales support for marketing to deal architecture. Our regional businesses will continue to be managed through the existing regional leadership structure. Onto Openreach on Slide 14. Revenue was down 2% on last year to GBP 1.2 billion, driven by regulated price reductions on our FTTC and Ethernet products, and a decline in our physical line base. This was partially offset by growth in FTTC and Ethernet. EBITDA of GBP 567 million was down 9%, due to the revenue decline and higher costs due to pay inflation and investment in recruitment and training of new engineers to support customer service and network deployment. This was partially offset by savings from reduced repair visits and other cost efficiencies. Our superfast network has now passed more than 27 million premises, and we've passed over 1.7 million properties with ultrafast technology, with the fiber take-up currently standing at around 37%. As shown on the chart, fiber penetration in our broadband base is just under 50%. The Openreach pricing discounts through volume commitments should accelerate fiber take-up and drive adoption of higher broadband speeds, a key requirement to driving acceptable returns from our investments. So in summary, we've made a good start to the year, delivering in line with guidance. There is no change to our outlook for the full year, and we'll continue to deliver against our strategy. Thank you, and I will now open for questions.
[Operator Instructions] We have a question on the audio, it comes from the line of Akhil Dattani from JPMorgan.
Can I start with a big picture question around the recent FTIR. And I guess, there's a couple of pieces to it. I guess, broadly, just keen to get your views, now we have both that and Ofcoms' follow-up response. But I guess, the clarifications I'm keen to understand are: Firstly, would you think that broadly is moving in the right direction to give you progress towards your 10 million home ambition into the midterm? Secondly, the document talks quite extensively around fiber over-builders and the view that the FTIR has -- that will lead to at least 1/3 of the U.K. being overbuilt. And I appreciate, obviously, the visibility is not very strong on this. Just broadly speaking, interested to get your thoughts around that. And then the last thing linked to this was there were also some interesting rhetoric on mobile, where there were talking about what would be needed to support 5G investment, so that at least some people interpreted that as meaning it could be supportive of mobile consolidation. So again, any thoughts there also of interest.
Okay. Thank you for the question. I'm going to give a couple of opening comments, and then I'm going ask Cathryn Ross, who leads regulatory matters for us to give more specific comments. I mean, I think overall, both the government reports and the Ofcom paper this week, I think are moving us in the right direction. I mean, the overall conclusion from our perspective is they're supportive of investment. They recognize that government and regulation plays a key role in building the business case to upgrade networks for full fiber and the gigabit economy, but also for 5G. And that they can play a role in ensuring that there's the right regulatory and framework to achieving that, including things like cut over from copper to fiber networks; how to handle the copper network in general; the fair bet enablers, particularly around getting access to Street Works and wayleaves. So there's -- I think, the broad direction of both reports I think signal, I think, an understanding that there needs to be an investment case to get this. I think they also reflect that, that investment case will not work across the whole of the country, where there will be parts of the country that ultimately will require some form of subsidy. But, Cathryn, would you like to comment and give your perspective on it?
Yes. Thanks, Gavin. On each of your 3 points in turn, as Gavin said, on the 10 million homes ambition, I think this document is a positive first step. But of course, it is a first step. I mean, Ofcom itself is referred to this as a major strategic shift towards incentivizing more investment. And in any sort of major strategic shift, you're going to go through an iterative process to work out the vision that you're trying to deliver, the policy framework and then you're going to get into the detail of the numbers. So there's some helpful words here, but we still have a lot of work to do both with government and Ofcom to work up the detail. And in particular, there are a couple of things in the document that are very welcome, on things like switch-over and recovery of corporate costs. But as you will know, the devil is very much in the detail and there's a lot to do on that. In terms of 1/3 of U.K. being overbuilt in relation to fiber, that is broadly consistent with the evidence that we submitted into the DCMS review at the start of this year. We always said that there were parts of the market that were susceptible to head-to-head competition between different fiber providers. What I think is really good in both of these documents is, as Gavin says, there's a recognition that, that is not true for all of the U.K. and that different approaches may be needed. And again, we're working with both government and Ofcom to make sure that they put in place what is needed to facilitate investment right the way across the U.K, which is, of course, the key strategic policy goal for government. Not much to say, I think, really on the -- on what they say about the potential for mobile consolidation. I certainly spent 5 years working at the Competition Commission, and the one word of caution I would give is that all these things are always done on a case-by-case basis. So there may be some warm and encouraging words in the document, but the analysis will always be done case-by-case.
Your next question comes from the line of Carl Murdock-Smith from Berenberg.
Two questions from me, please, both on Consumers. Firstly, on Slide 10, can you just clarify and comment around Consumer EBITDA, why you're flagging higher device costs later this year? I would've thought that under IFRS 15, won't you -- won't that be offset by the accompanying device revenue? And then secondly, on the Consumer price increases you've announced for September, they're coming in 8 months and 9 days after your most recent price increases in January. Now on the risk of sounding like a pedant here, but could you provide some commentary on why you've opted for a shorter pricing cycle than the 9 months we've become accustomed to? Do you feel people will be busier in that back-to-school period, so won't react as much? Or do you need those extra 3 weeks to hit budget? And for example, with SSE offering to freeze broadband prices for 3 years, is a 9-month pricing cycle sustainable going forwards?
Nobody would call you a pedant, Carl.
You should talk to my wife.
Right. I'm going to ask Mark just to talk a little bit about the point we made around expecting more hardware sales later in the year. Do you -- might be on IFRS, do you want to talk -- I'll let Mark talk about that and then also carry the pricing point.
Shall I talk to the shape? I think all we're trying to do here, Carl, is just explain, and you guys know this, that particularly Mobile, we have a bit more seasonality and volatility around major launches and most people would be predicting a September/October time frame for some major device launches from Apple, for example. And we know that drives a lot of sales and upgrades, and therefore a bit more volatility than the quarter we've just seen. So we're -- all we're saying is not every quarter is going to be as consistent as this one in terms of EBITDA. We're also flagging some increased costs on rights as we move into the new cycle of UEFA Champions League as well. So that's the commentary we've given on the seasonality in the handset cycle. Obviously, we're very excited about those new launches. On the pricing, that's something we always look at, and this is the balance of us reinvesting more in network and service and brand and other exciting propositions, products and improved service for our customers. And broadly, the timing is consistent. We can't time it exactly to the date due to operational reasons, but the timing is pretty consistent year-on-year.
On IFRS 15 very briefly, Carl, you're right that on the direct channel, if you go through a period of elevated handset sales, that the revenue is recognized in the -- alongside the costs as opposed to being deferred. Our key point actually is around the cash flow, that it has an impact to the cash flow level. Also, of course, the impact is attenuated in the indirect channel, which remains an important part of our business.
Your next question comes from the line of Maurice Patrick from Barclays.
Yes, a quick question really sort of a follow-up on the government FTIR document. So the government's made it a bit clear they want to have full fiber everywhere, which, I mean, you've spoken about. In sort of past conference calls, you have highlighted you can't spend CapEx any faster than you currently are, you're running at your full run rate so CapEx couldn't go up. You've heard today that maybe you're running at a lower cost to roll out than you thought. Presumably, things like sourcing out wayleaves could lead to an acceleration in rollout speeds. I guess just thoughts about whether you can accelerate the level of FTTH build in the coming sort of quarters but also years if you see some of these changes come?
Thanks, Maurice. I'm going to ask Clive just to comment on the how the FTTP city's plan is going, and potentially what are the factors around all the things you're learning in the market and what are the factors around acceleration.
Okay. Thanks, Gavin. Look, I think we got off to a really strong start on the Fibre First program. We're a little ahead on our throughput. I think as the briefing shows, we're completing about 10,000 FTTP homes passed per week, and we are achieving the bottom end of the guided cost per home passed. But it's -- whilst we got off to a great start, it is still early days and we need to show that we can continue to achieve low build costs as we keep scaling and as we go to more cities. What I am growing ever more confident in is that we can underpin the public statement that we can get to 3 million homes by 2020, and that's milestone one. As we approach that, we will reassess our ambition, which we've already stated publicly, which is to, given the right conditions for investment, get to 10 million by 2025. So the early indicators are all positive, but we've got more to prove, both inside of Openreach in terms of build throughput and build costs; and as Cathryn indicated earlier, we need to see the enablers for fiber build being cemented through the work of Ofcom and the government.
Your next question comes from the line of Dhananjay Mirchandani from Bernstein.
My question is related to Consumer broadband net adds. I mean, I recognize that you've elected to discontinue reporting this line, wish you'd reconsider, but I'll ask anyway. How did you fare on that measure in the quarter given that TalkTalk generated a pretty strong 80,000-odd net adds and Vodafone 60,000? And although Virgin is yet to report, it does suggest that BT Consumer is losing some share despite your lower fixed line churns. So how concerned are you about this trend given that you're adamantly following through on your price increase cycle in September?
Thanks for the question. I think just an overall comment to start with. We've put together, I think, a very comprehensive set of KPIs that we think gives you everything you need to be able to model our business going forward. And in the Consumer space, in particular, we've put together a set of KPIs that I think really allow you to model what our strategy is and how it's delivering. And just to reiterate, we've been very clear, the focus is on value, not volume. We're not going to chase margin or customers. We want a broadly stable customer base, and we want to drive cross-sell and up-sell and overall product holding for our customers as we invest more in product and service and benefits. And that's the key to the strategy. You can, of course, as you know, calculate a rough estimate of what our customer base is by looking at the revenue and the ARPU, and we will add to the metrics going forward and supplement the churn numbers that we give with the overall RGUs per customers in the next couple of quarters that, again, is a number, I think, really underpins the strategic direction we're taking the Consumer business. And that is our focus. Just a comment about the TalkTalk numbers, that was a change essentially in their wholesale base. It wasn't -- I think they referenced a small decline in their retail base within the quarter. And if you can look through our KPIs, which no doubt you will study in great detail, you'll see that it didn't come out of BT Wholesale's numbers, which are largely flat quarter-on-quarter. Mark, do you want to just talk any -- talk about...
Well, I think just to build on that, we've now, I believe, got much more transparency because the numbers we had before were a blend a number of units. And you can now see the Consumer unit performance really clearly on all the key product lines: fixed, mobile, equipment. We've got the revenue per user in there as well. And as Gavin says, in 2 quarters' time, we will be sharing more detail on RGUs. And that's important because our focus is on convergence, our strategy is to be the market leader in convergence, and RGU performance is going to be really important for us. And as Gavin touched on earlier, we're not being driven by net adds. Of course, we look at the base and the movement of that and our performance in the market, and that's important to us, but it shouldn't be #1 driver for us in creating shareholder value. The big launch for us was Plus, and that's our first convergent product, and that's off to a very good start just a few weeks in. A lot of interest from existing customers on that and a really good performance early on, and that's what we're focused on.
Can I just follow-up very briefly?
Sure.
On Plus, can you just give us a sense of what the share of subs that have bought mobile as well as bits of BT today instead of converting into Plus versus net new subs on other side or collectively across both products?
Well, we'll be sharing more details on RGUs in a couple of quarters. That will give you a really good indication of how we're doing selling multiple products to our converged portfolio. And we're not breaking out any more information on Plus. Suffice to say, it's off to a good start, more than 100,000 customers, lots of interest from our existing customers, and it's already making up a really encouraging proportion of our upgrades, which I think is a good start to convergence in the U.K., which we're excited about.
Your next question comes from the line of Michael Bishop from Goldman Sachs.
Just 2 questions from me, sadly, on regulation. Firstly, on the fair bet principle and both, I guess, government's documents and also, in particular, Ofcom's response. If I was to play devil's advocate, the 2 issues from the FTTC fair bets that you've highlighted were: number one, Ofcom's splitting the investment into various stages and arguing different levels of risks associated with each stage; and then secondly, the level of absolute return under the fair bet was not defined beforehand relative to your WACC or cost of capital. So I was just wondering, given Ofcom saying they can't be more granular and reiterating that they'll look at investments in FTTH in stages, what gives you comfort that this is moving in the right direction with regards to the fair bet? And then secondly, on the FTIR and picking up on the FTTH build cost, one of the comments buried in that document essentially said fiber deployment costs are broadly uniform for 2/3 of the U.K. But from all of your messaging, particularly around the first 10 million homes, it feels like those homes are maybe GBP 300 to GBP 400 per home or maybe even the low end. And then I think you've stated in various Openreach documents that the next 1/3 is towards double the cost. And then, obviously, the final 1/3 is disproportionate to the first 1/3. So I was just wondering if you could try and sort of correlate those comments on what you're thinking is.
Very good. Thank you, Michael. I'm going to ask Cathryn to comment on fair bet if -- and then Clive to comment on rollout costs.
Okay. I mean, I think the first thing to say on fair bet is that we are positive about the clarity that Ofcom has given and the document that it put out early on this week. We already had agreement on some of the principles around fair bet in the context of the WLA, but I think they're more clearly stated now in the Ofcom document, and that in itself I think is welcome. On your point about splitting investments into different stages, I mean, I think everybody would acknowledge that undertaking investment when things are relatively less certain and relatively less known is riskier than undertaking investment after some time has elapsed and you've got greater knowledge and greater certainty. And I don't think that's unreasonable to take that into account when you're thinking about the fair bet, and that's essentially what Ofcom is saying and we would agree with that. Obviously, we will need to talk to them about exactly how that's operationalized as they develop their thinking on the methodology. One thing I would say is that they do explicitly flag that in their document that they are exploring the feasibility of giving greater clarity and greater granularity on the fair bet going forwards. So again, I think the door is a little bit open there to continue the conversation with them about what certainty and clarity they can improve on in the future.
Thanks, Cathryn. Clive, rollout costs?
Yes. Okay, so to rollout costs. What you will see us doing is exploring in detail the cost of rolling out to different types of mostly urban and suburban areas. That's why in the Fibre First program, we started in 8 cities. Some of them are huge -- London, Birmingham, Manchester. Some of them are smaller. The ninth one that's been announced is Exeter, it's a much smaller-scale city. So please accept this is early days. We are exploring what it costs to deliver to different urban and suburban areas across all of the U.K. refining our understanding and tuning our deployment techniques. So we're learning as we go. The report today is that we're at the lower end of the range that we guided on previous results calls. My aim is to keep it there and to see how far we could go in terms of percentage of the U.K. at those sort of cost points. But too early to give you a detailed answer.
Your next question comes from the line of Nick Delfas from Redburn.
So just a very brief one on Solus voice, if you could help us size and time the impact of that. And then the main question is on Wholesale. Obviously, it's great that the EBITDA has got better. But when one looks at the revenue trends, the voice and VoIP lines, the order books, none of those look great. So could you explain a little bit more why you think Wholesale will -- sort of BT business will have a flatter outcome on EBITDA through the rest of the year as well?
Very good. Simon, do you just want to comment on the scale of Solus voice and its impact?
Yes. I mean, I think we -- when we put forward our proposal, I think we made clear that the impact during this financial year 2018/'19 would be in the tens of millions of pounds.
Very good. And Gerry, outlook on BPS?
With Wholesale?
I know it was -- it was on BPS, you corrected yourself, didn't you, Nick?
Yes, sorry, it's BT Business. If you look at the EBITDA trend versus the top line trend. And then prospectively, how you think that's going to work and why EBITDA is so much better than the revenue.
Okay. Let me take the revenue line first then. Just in terms of the revenue, you can see that year-on-year, the comparison year-on-year on revenue does have a little bit of the flow-through of the legacy public sector in there. But more importantly, also, we're walking away from a number of lower-margin revenue items such as the equipment. However, there is still the challenge in there of voice and broadband legacy products. And you can see in there that is primarily voice, although broadband will remain a bit of a challenge in terms of moving that base. And I'll come back to that in a second. You can see the EBITDA is better. The position there year-on-year was it was a fairly light comparator in Q1 last year. Q1 last year had a little bit of impact on higher cost. We've got a little bit of benefit this year on high -- in lower cost. I think if you look at the EBITDA absolute, we've been around the same number over the last few quarters, and what we've been doing there is managing our cost base to deal with the revenue impacts. Going back to the revenue line. I think the challenge we've got there, you see that in broadband, much the same as Mark was saying, within the broadband space, we are very focused on making sure we get value. And you can see the 4G Assure launch has actually given us a better mix, and you can see that and the -- that we've got a slightly better quarter-on-quarter broadband revenue. I think we definitely need to make sure we get the mix of volume and value right there, and we're very focused on driving both the volume and the value in there. Voice is a more challenging position for us. We're definitely seeing -- we've got a -- just a general decline on voice. The move to IP, I think we're starting to get good traction on that. Mobile is the other place that this voice is going. And again, we've got a reasonable position coming on volume and mobile. The thing I'm very pleased about there, I think there's a lot to go after in our base when you look at where we have fixed customers with no mobile. There still are [indiscernible] to go after in there.
And then just on the order book that you referenced, Nick. The order books tend to move around a bit and -- in the base. In other words, last year's number, there was a very big contract, a very specific contract that sort of skews the number a little bit.
Yes, I understand that. But I'm -- I was just interested, you put the order book and the KPIs at all given that we don't necessarily [indiscernible].
Good question. Good question. We will come back to this in later quarters.
Can I just ask one very quick final thing. You referenced TalkTalk, which is one of the great murder mysteries of the sector right now. Who else offers this kind of wholesale DSL service and basically reselling of your fiber product that TalkTalk seems to be gaining share from? Who are the other people they might have taken the lines from?
Yes. We won't comment on that. You could probably figure it out if you look through things. But what I will say is it's an [ offer ] from BT also, or BT Retail.
Your next question comes from the line of Nick Lyall from SocGen.
Just a couple, please, Gavin, if it's okay. Just first one on Consumer, please. On the ARPU number, it fell sequentially this quarter. I mean, is that just the seasonality point and timing of price rises? Or is there something a little bit weaker, maybe in terms of promos or even a spin from the back book to the front book and people taking up some of the new prices? And then secondly, on G.fast, the disclosure shows some good coverage numbers in Openreach now. So when should we expect a G.fast push, because it looks like the mix in the Consumer side, at least on KPIs, we can see is still pretty thin?
Do you want to comment on the 2 Consumer questions there are and maybe Clive -- sorry, I'm pointing at Mark when I say that, and then maybe, Clive, talk about G.fast expansion?
Yes, I see the questions on the broadband side. I mean, it's broadly flat year-on-year and quarter-on-quarter. We've got a declining voice base and the Solus price reductions that we talked to earlier as well, and that's been offset by increased TV and Sport revenues. But broadly flat. Plus you've got this timing impact we talked about, the price rise, and that's not running exactly on a 12-month cycle as well. So broadly stable is how I'd describe it.
And G.fast and, more generally, on ultrafast in your -- Clive, in your offer.
Yes, okay. I think the question was really about take-up on G.fast. So a couple of points to make. One is that we've launched our volume deal into the market. We announced that earlier this week. Any CP that takes up that volume deal will have commitments to volumes not just on the superfast platforms of Openreach, but very specifically on the ultrafast platforms. So those volume deals, as they are adopted by our customers, will underpin growing volumes on the G.fast platform as well as the FTTP platform as well as the VDSL platform. So please, think about G.fast and the volume deal as being linked in that sense. And then in the early adopter volumes on G.fast, I'm very pleased to report that the customer experience feedback has been very positive. So it looks like the platform is going in, but the cost points that we'd expected and the provisioning experience and the in-life experience on G.fast is going down very well with both CPs and their end customers.
Your next question comes from the line of Sam McHugh from Exane.
Yes, a couple of questions from me, Gavin. First on content cost. I guess when I look in the old disclosure when you used to give it quarterly, it was always broadly even across the year. So I guess the quick question is that the same under IFRS 15? And then as I look towards Q3, Q4 this year with the new European football, how much roughly are content costs going up versus this quarter? Secondly, just on Openreach, I think you're now disclosing you passed about 200,000 homes with FTTP. Now when I look in BT Consumer, a very small proportion have [indiscernible] 30,000 customers. So would it be right to think that the majority of people who are taking FTTP today are effectively just choosing the 40, 55 or 80 MB product? And how does that make you think about the monetization opportunity of higher speeds beyond that, because at the moment it appears people are not taking them?
Okay. Simon, do you want to talk...
On IFRS 15, there's no impact on content costs.
Costs at all. I mean, we're expecting there to be a step-up with Champions League.
There is a step-up which we referred to in terms of the impact on EBITDA going forward. What's mainly related to the Champions League Europe and Europa.
And then on take-up of FTTP, Clive, do you want to...
Going absolutely fine. We've got a couple of 100,000 customers who've adopted the platform so far. The in-life experience is very positive. So there is a considerably lower fault rate for customers on the FTTP product, which is very pleasing both for Openreach and for the CPs and for the end customers. And we are selling more FTTP now than we were even a quarter ago. It's a very pleasing progression. We've got to hone our provisioning techniques in order that the customer experience on provisioning is super, and we are working on that right now.
And just to add to that. I think Clive's discount offer will incentivize customers to move up the speed tiers, which is very important.
Your next question comes from the line of Steve Malcolm from Arete Research.
I'm going to come back to Nick's murder mystery, if I can briefly. Just -- and I really want to sort of understand the external broadband strategy sort of on a larger basis. I mean, if I look through your KPIs, I guess the person that TalkTalk won the business from was provisioning broadband through WLR and SMPF. I mean, you lost 260,000 of WLR lines in the quarter. Is that a fair summary? And then when I look at the Wholesale KPIs, it looks like your Wholesale broadband ARPU fell by about 8% to 9%. So it looks like you're taking quite a lot of price there to try and protect your share. You're now the kind of #2 player in the market by some distance. Can you just give us an overall sense of, first of all, is that first part of the analysis correct? And secondly, what the strategy is from here. I mean, do you pass on those GEA price cuts that Wholesale will presumably get in some way, shape or form to your Wholesale customers? Try and win back some share of its own, that will be great. And then just coming back to the retail broadband market and just to prove that 2 analysts can think completely differently. I guess, my assessment is the market added about 130,000 in the quarter, that's 3x the level of last year. Vodafone and TalkTalk combined did roughly the same on a retail level. Sky doesn't really disclose anything, but its sort of numbers suggested they didn't add a lot of broadband. Can you possibly give us a little bit more color? I'm not asking for a sort of net adds number, but it looks like you must have added quite a few broadband customers, maybe just a sense of what's going on in the market. And then just one final one on G.fast. I mean, just to come back to that, you've only got 4,000 customers. Last quarter, you added 600,000 lines; this quarter, 100,000. Can you just give us a sense of how that builds over time, the base, not so much the customers but as you build it out? And I understand that CP signed up volumes deals, they will add some more. But just help us understand more the rollout of the G.fast product going forward.
Okay. I'll start on the murder mystery, and I'm afraid I'm not prepared to give any more clues. It's not right for us to talk about, in any more detail, what's happening with another player in the market. I think you will be able to diagnose it if you look through enough of the KPIs and talk to their IR department. I'm sure they'll explain what's happening. On Wholesale and building -- growing market and taking advantage of the Openreach offer, Gerry, do you want to comment on that?
Yes. I mean, we've not decided actually how we'll see the market play on that. We've got a couple of scenarios running on exactly how we'll play it, and obviously, not keen to divulge what we'll do on that yet. But we do see it as a positive thing to actually drive and support our customers into higher value proposition. On your point about the broadband base stable and the decline in pricing, we've said a number of times, this market is very aggressive at the moment. It's very price sensitive. It's difficult to protect price reductions as it comes through. They're being passed on very quickly. What we have been doing is making sure that we secure the bases that we've got, and that's why you see there's very little base movement. But we start the year generally with a number of negotiations in play. And that's what we've looked to do here, is actually to secure the base but that is at the cost of some price reduction.
Very good. I'm going to ask Mark to comment on the sort of -- give you a qualitative feel about what's happening in the broadband market. And then maybe Clive talk to how do you see ultrafast picking up from here with rollouts and the impact of your offer.
Yes, thanks, Gavin. I'm not going to sort of go around again on the net adds point. I mean, I will say, we are very, very focused on our existing customer base and the retention there because there's 2 ways to play growth. One is to go for high sales in the market and the other is to get better at retaining existing customers. You'll see in the fixed churn line, which we now do split out for you in the KPIs, we've had a good churn performance in the quarter and that will fluctuate around a bit. And it is a bit seasonal and impacted by some of the pricing activity. But there's a positive trend there, which I'm pleased with. And our focus is continuing to focus on existing customers, leading in convergence with BT Plus and driving RGUs. And just not even 1 quarter into the launch of that strategy, the early indications are positive. It continues to be a dynamic market with different players coming in and putting various offers in at different times, and that's been the case for years and will continue to be. But I'm confident we've got a really compelling proposition in Plus and convergence to go forward. And we also have EE and Plusnet broadband as well to help us trade in different segments.
Clive, can you dive into the ultrafast market rollout.
Yes, fine. So a few points to stress. One is the G.fast platform will expand very significantly this year. And again, link that, please, to the volume deal which will drive adoption on the platform. And please understand that some of the CPs have IT work to do and their own customer service process development work to do before they can adopt at scale. So you'll see them do that as they sign up for the volume deals. And of course, the same applies to FTTP. The volume deal will incent them to adopt the platform and sell ultrafast FTTP services to their customers. And I'm already seeing them dive into the IT development and the process development that will help them take their products to market over our FTTP platform.
Can I quickly follow-up and ask, is it fair to assume you've had fairly lengthy discussions -- preliminary discussions with CPs and the regulator about the new volume offers and that's framed and shaped the precise offers, and you're pretty confident that they will, once they've got these IT issues resolved, sign up fairly quickly?
Yes. You can be assured that we have spent a vast amount of time with all of our big customers and a good number of our smaller customers working the detail of the deal and having them understand their commitment to Openreach, not merely the discounts that we are offering. So they understand this in depth, in real detail, and I'm expecting them to sign up and I'm expecting the volumes to appear. And very importantly, not just on the VDSL platform, on those ultrafast platforms as well.
Your next question comes from the line of Paul Sidney from Crédit Suisse.
Just a couple of quite high-level strategic questions, please. Firstly, on regulation. We've seen under the new EU telecoms code that they're really sort of changing the way they view wholesale-only networks and maybe even going as far as to say that if [ an incumbent ] telco splits its network from its retail business, then that will lead to deregulation. I was just wondering if BT had taken a look at this, about this potential strategic option in the future and what potential stumbling blocks there would be to such a separation? And then secondly, on content. We saw Amazon win one of the EPL packages back in June and along with the Sky wholesale agreement you signed last December. Does this really reduce the pressure on BT in bidding for content going forward, given that line lost to Sky in the past was the main reason for entering sports content in the first place?
Let me content -- let me comment on the Openreach question and the network question to start with, and then I'll ask Mark to talk about content. Look, we continue to believe that full structure separation weakens the pension covenant and, ultimately, that would lead to higher deficit repair payments. We continue to believe that separation puts at risk the investment strategy around FTTP and that separation is a very complex issue. So we remain happy to be 100% owners of Openreach. I think the progress we've made through the DCR, I think, improves the service that Openreach offers every bit across the industry, all CPs across the industry. And I think we see that in evidence from the Ofcom report, the progress we've made with the 2p that they've announced this week. And also, I think it's evidenced by the fact that Clive is -- and the Openreach team have come up with a commercial offer that really is there to build the market for everyone. So we remain of a view that, ultimately, owning the network is the right thing to do for shareholders, it's also the right thing to do for the country as a whole. And it will ensure that Britain continues to be at the forefront of the digital rollout. So that's our position regarding Openreach. On content, Mark, do you want to just comment on it?
Yes, I mean, we set out a really clear direction for our TV and content business in May, we call that super aggregator, and that's all about partnering with the very best content providers on the planet to give our customers the widest choice. And our role in that is to help our customers find that content, give them innovative ways to pay for it. And of course, using mobile gives us a lot more opportunity to do that now and integrating those partners into one TV service. So we've got Sky, Amazon is the recent announcement and, of course, Netflix. So we've got a really compelling lineup for our customers in less than a year to launch and bring together. So we're excited about that. We think, for customers, it's going to be a really good proposition for them and a really important part of our convergence journey. Rights within that, our view, is that rights do play a role within the portfolio at the right price. We're very disciplined on our approach to this. We understand the value of these rights now as we're beyond the launch phase of sports, and now we understand what our customers are watching and how valuable they are, and therefore, we're very clear on the value. And you'll see us in our bidding being very disciplined and not going beyond what we believe the rights are valued at.
Very good.
Sorry, I just have a quick follow-up. If Amazon did win more packages going forward, do you think you would secure access to the content? Do you think they would wholesale it to you?
I think there's a lot of ifs and buts in that. We just closed the last auction. We've got rights now until '21, '22.
Yes, that's right. And just coming back to the point. Our approach is to be a very, very open and collaborative partner, partnering with the best. You can see we have a good relationship with Amazon as they're a partner on the platform and we'll continue discussions with them. But we're confident we'll be able to offer our customers more and more choice.
So thanks, Paul. We need to move on.
Your next question comes from the line of John Karidis from Numis.
Firstly, when you bought EE in January 2016, it's under-indexed in the business segment of the mobile market. Has it caught up now or is there more to go? And then secondly, on duct and pole access, can you help me think through your -- the risk that you're facing given that we're going for unrestricted duct and pole access? And linked to this, maybe I can ask Clive. So you are incurring GBP 300, let's call it, per home passed. TalkTalk is imagining GBP 500 and Virgin is experiencing GBP 600-plus. So how much of the differential is because of duct and poles? How much is it because of your -- roughly, of course. How much is it because of your scale? And how much is it because of your existing network? Just to help us understand the moving parts please, Clive.
Okay. Gerry, Mobile and the business market. Cathryn on regulation. Clive on the cost of rollout.
I'll start. On Mobile and the business market, to be honest, the share percentages on this, when you look at analyst reports, they do vary quite a lot. I think we showed a few quarters ago, I think it was IDC, but I think we showed something like 34%. In truth, we'll get different shares in different parts of the business market. I think collectively, we are probably 3 to 5 percentage points below that in terms of our share. And the reason I can say that is, actually, when you do look at the base we have and we look at the penetration and the customer base we have, there's a lot to go after. So I don't think we're penetrated. I don't think we've got a ceiling. In some parts of the segments, yes, we're very strong; on others, there's more to go after.
Very good. Cathryn?
Yes, you're right. I mean, the Ofcom document does talk a lot about duct and pole access and it makes clear, I think, that they would like to move to unrestricted duct and pole access. But I mean, to be clear, the duct and pole access regulation that we've got today relates to mixed usage and not to unrestricted. And Ofcom will have to go through the usual process in developing policy and developing a methodology in consulting on that and putting out a decision document before we actually do get to unrestricted duct and pole access. I mean, a couple of points to make on that. I mean, clearly, there is a risk to the business from unrestricted duct and pole access because Ofcom's intention in pushing it is to promote infrastructure competition. But there is potential upside as well. And the document makes really clear that where Ofcom thinks the competition exists in sufficient degree and, potentially, also when they believe that competition is realistically in prospect, we may be able to secure some deregulations. So it is not all downside there. But just to be clear, the regulation that we have today relates to mixed DPA and not to unrestricted.
Thank you, Cathryn. Clive?
Okay. So there are a number of reasons why I think we will be highly efficient and productive FTTP delivery. One is about having a duct and pole network, and that is being made available to other CPs. But there are other major reasons as well. One is we have a massive Ethernet network, which addresses 275,000 endpoint locations across the U.K. So we actually have a very, very large fiber network already from which to leverage for a Consumer FTTP rollout. Secondly, we are innovating. So we're not new to this. We've been practicing for the last 18 months before we kicked off Fibre First, and we have innovated in componentry for FTTP and delivery processes. So we think we're ahead on that game. And then finally, I would say, we have been very particular about what elements of deployment and, hence, what capabilities are developed by the in-house team as opposed to by the subcontractor population. And I think the capabilities of our in-house team are a distinct and positive differentiator for Openreach when compared to others who might try FTTP deployment. So there are a whole bunch of reasons why we are going to be the leader.
Very good, John. We've got time for 3 more questions, I'm going to try and do it in 5 to 10 minutes.
Your next question comes from the line of Jerry Dellis from Jefferies.
I've got 2 questions, please. First one is for Clive and possibly Cathryn. The GEA volume agreement that you outlined earlier this week, obviously, commits or offers very -- pretty large discounts to CPs who commit more than 50% of their business to you over a fairly long-term commitment. And I suppose extending this principle to incorporate FTTP, as you have, created a pretty strong first-mover advantage potentially for Openreach over other fiber network builders. Just wondered whether that has been explicitly signed off by Ofcom, the degree to which that was a bone or a difficult discussion with Ofcom. And whether the 50% threshold you think might be capable of being moved up in future. And then secondly on Business and Public Sector. When we think about the sort of EBITDA declines that we were seeing for much of last year, sort minus 9%, minus 11%, minus 13% EBITDA trends in sort of Q2, Q3, Q4, was that primarily a function of the headwind from the public sector contracts sort of rolling off? And as we look through the rest of this year, are there sort of any unusual items or one-offs that we need to be aware of in sort of predicting BPS EBITDA trends for the balance of the year?
I think, Jerry, you used up almost all of our 10 minutes there, but anyway. Right, Clive, talk to us about...
The volume agreement.
Volume agreement. And then, Gerry, do you want to talk a little bit about Business and Public Sector?
Be assured, please, that over a period of months, not weeks, we have reviewed, iterated, evolved the volume agreement terms with our CPs, and we have kept Ofcom, our industry regulator, abreast of the whole process and listened to their comments. It is not their job to approve our volume deal. Be assured also that we have taken very extensive legal, third-party legal advice, including use of third-party economists to test the deals that we are offering, meet the equivalence tests that anybody might choose to apply when looking at a volume deal that is new and of a kind that's never been done before. So we have done a heap of due diligence, including using external legal assistants. And then the second part of the answer is, you're talking about the 50% issue, again, be assured that we are going on the front for Openreach, we are out there to sell and to move our customers up the platforms, VDSL to G.fast to FTTP. So I would be very surprised if other volume deals that were more focused on ultrafast didn't follow this at some point in the future.
Very good. Gerry?
Yes, I think I can brief -- be brief on this. I mean, we've been very clear. It's the same drags that was, those legacy contracts that were the big drag. And then there's legacy products underneath that, which I talked about earlier. We don't see anything -- don't foresee of anything funny coming through for the rest of the year.
Your next question comes from the line of James Ratzer from New Street Research.
Just going back, again, to the FTTP topic. Just wondering if you could help me kind of square the circle between the fair bet principle, the numbers you put out actually in your consultation last year and then the recent Openreach price discounts. Because I think in the consultation you put out last year, you were saying that under a cutover model you wanted GBP 7 of value uplift from FTTP or nearer GBP 20 a month to make the business model work in a commercial rollout. And yet under these discounts, the uplift you're offering customers to go to FTTP is only GBP 2 to GBP 3 per month. How do we square the circle on that? I mean, do you need to push prices up on the FTTP in the future? I mean, presumably that's not the intention. But just help to square the circle on how the consultation figures from last year's square with these volume discounts, please? And then secondly, Openreach kind of line -- physical line losses in the quarter of 96,000. Any steer you can give on that, that's a bit of a slip this quarter. Is that Project Lightning? Is it just seasonality? How should we think about this quarter and what's coming in the next few quarters?
Clive, a couple questions there for you.
Okay, right. I think the squaring the circle is just to understand that the FTTP footprint that is included in the volume deal today excludes that element of Fibre First, which is overbuilding VDSL with FTTP in the cities. We've yet to have or to finish those conversations with our CPs. So it is still the case that where we overbuild VDSL with FTTP, we will be looking for an increment in value from our CP customers. That's the missing bit, I think, in your analysis, and I hope that helps square the circle. So really, this FTTP that's in the volume deal right now is that which has been built on new sites and that which has been built largely through the BDUK program. Does that answer that question?
Yes, very clear. So do you have what the prices are, please, currently for FTTP, where -- if there's anywhere where you're doing any overbuild on that at the moment?
No, we have not released that footprint for sale. We're having conversations with our service providers, and they are engaging very actively with us to talk about it. They see the value in it.
I think the other benefit [ that I know of ] in commercial arrangements, subject to the further discussions that need to take place with the cities, is the commercial arrangements drive faster take-up because the CPs are strongly committed behind it. So that's clearly another consideration in the discussions that are still underway on FTTP.
Right. And then finally on line losses, the number in Q1 was very similar to the number of the prior Q1. So if you study our numbers on line volumes, there is very clear seasonality.
Okay, clear. And just to be -- just final one. The 3 million FTTP you're going for, that doesn't yet include any VDSL overbuild?
Yes, it does. The FTTP number that we're talking about, 3 million, is the totality of all of the FTTP that we are going to build between now and 2020.
Very good. Thanks, James. Which means our last question goes to Wilton Fry.
Your next question comes from Wilton Fry from Royal Bank of Canada.
Yes, a quick couple of questions. The FTIR talks about 15 million homes by 2025. You've obviously got an ambition of 10 million and [ you said ] that the market would do at least another 5 million, that will give you about 66% market share at Openreach, and that's obviously down [indiscernible] currently. So I guess, really, if you want to sort of increase your market share, let's say, you're going to get to 12 million by 2025, that would mean, do the math, you'll end up with about 1.5 million a year. So I'm just wondering if you can actually do -- physically actually do that type of pace and could you also do that without bidding up the cost per home in so doing? And the second question, back to RGUs, I'm afraid. But obviously, you can have -- delay it before you give us any RGU data. I'm just wondering is there a problem with your systems that mean you can't give us that data now?
The scaling beyond 2021?
Yes, pace and cost of build. We are learning what pace we can run at. Today, we're running at about 10,000 homes passed per week. I am very pleased that we are at that level. We're at that level a little earlier than I had anticipated. So we're going to learn as we go about what pace is sustainable. And it's not simply about the pace that we can build at, it's how tolerable a high pace of build is for a given urban area -- how many trucks, how many roadworks. The constraint isn't just the Openreach build capability, it's what the local authorities will tolerate. And on cost, we have very clear cost targets and we shared cost guidance with you. The positive news of this early stage is that we're at the lower end of the range, and we will continue to innovate to keep the cost as low as possible. That's the intention.
Very good. And then RGUs.
Just on the RGUs, we take the information we report on really seriously, and we want to get it absolutely right. And we want to include EE as well as BT in the performance, which we haven't done before. So it's purely a case of us doing the integration, doing the testing, and making sure the information we release is absolutely right before we release it, and that's going to take up a couple of quarters and then we'll be able to provide some real color on the convergence journey.
Very good. Thank you, everyone. And thanks for joining us today and have a good summer.