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Hello, ladies and gentlemen, and welcome to BT's Q3 2020/'21 Trading Statement Conference Call for the third quarter ended December 31, 2020. My name is Sarah, and I am your coordinator for today. [Operator Instructions] I would like to advise all parties this conference is being recorded today, and I'll now hand you over to Mark.
Thanks Sarah, and welcome, everyone. My name is Mark Lidiard from the BT Investor Relations team. Presenting on today's call is Philip Jansen, Chief Executive. Also on the call for Q&A are Simon Lowth, Chief Financial Officer; and members of our Executive Committee. Before we start, I'd 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 Philip.
Thanks, Mark. Good morning, everyone. Thanks for joining today's call. Before we get down to business, I'd just like to extend warm welcomes to Rob Shuter and Harmeen Mehta. Rob joined us on Monday as the incoming CEO of Enterprise, and Harmeen is starting next month to lead our new digital unit. At the same time, I'd like to pass on my sincere thanks to Gerry McQuade for his wise counsel and contribution to BT over many years. As we establish a digital unit and move to the next stage of our strategy, I'd also like to thank Mark Shurmer for his contribution over the last 3 years and wish him well for the future. As Mark said, as normal, Simon is here with my other members of my exec team, and we'll be able to answer your questions when I finish my prepared comments. So moving to the highlights on Slide 4. Third quarter group financials were in line with our expectations despite further lockdowns, and we are reiterating our outlook for this year with the exception of normalized free cash flow, where we are lifting the lower end of our range so that the full year '21 outlook becomes GBP 1.3 billion to GBP 1.5 billion. In the quarter, we made some important changes to support the next phase of our modernization. We announced the creation of a new digital unit to be led by Harmeen, who is joining us from Bharti Airtel. While our leading networks remain at the heart of BT, we now need greater focus on digital innovation, built on a great IT platform, to enable the creation of superior products and services that are easy for customers to buy and use. At the same time, we remain focused on transforming and simplifying the business by removing legacy networks, creating more modern and flexible IT and simplifying our product portfolio and processes. This program will be managed by the new digital entity, working closely with the customer-facing units. Separately, we have created a standalone procurement company in Dublin, a well-established hub for many big tech businesses. This new operation will increase BT's buying power while allowing simpler processes and the introduction of AI technology to drive efficiencies into our purchasing capability. And lastly, we're expecting Ofcom's wholesale fixed telecoms market review statement later this quarter. I will cover our expectations for this in more detail later. But in summary, while we expect the framework to be largely positive for investment in many areas, there are some key points of clarity still needed to unlock industry-wide fiber investment that the country needs, particularly around the fair bet. And we still need to see concrete progress, not just words, from government on the things they can do to support the fiber rollout. It's worth saying again that BT is absolutely ready, willing and able to build like fury and fiber up the U.K., but we do need the regulatory and policy enablers to ensure a fair risk-adjusted return or the pace and geographical mix of build will be impacted. Moving to Slide 5 and progress against our strategic pillars. The first is to build the strongest foundations, improving and future-proofing our fixed and our mobile networks and also modernizing our business. We now have 5G live in 125 towns and cities, providing the widest population coverage of any operator, and the number of 5G-ready connections have now reached 2.1 million, up more than 900,000 in the quarter. Openreach has continued to extend the reach of its full fiber network, which now passes 4.1 million premises, a build rate of more than 1 every 15 seconds in the quarter. This keeps us on track to reach our build targets if the conditions are right. Of course, connecting customers is just as important as building the network. In the quarter, Openreach announced an extension to its popular local marketing and FTTP-only deals. It has connected premises at the rate of more than 10,000 a week, bringing the number of full fiber customers at the end of the quarter to 790,000. We're pleased that many of those customers have chosen to connect through BT CPs and consumer alone out of their record 88,000 connections in the quarter, taking its base to 686,000. This momentum is important and is expected to continue in future periods. In quarter 3, the first copper stop sell took effect in our pilot city of Salisbury. Openreach added a further 51 exchanges to the 169 already announced, increasing the total number of premises which will be in stop sell areas in the next 12 months to 2.2 million. As we build the networks and products of the future, it's critical that we continue to modernize and simplify the company. And work is ongoing across the business to shape BT for the years ahead. In December, Global announced the sale of its Italian businesses serving public administration and SMEs. Staying with Global, we have removed 30% of product variations in the Global portfolio. And in Consumer, we've been working hard to remove nonessential pricing plans. We're using a new process to simplify the portfolio and it's taking out 13,000 promotions this year, representing some 30% of the BT portfolio. Slide 6 sets out how we've continued to build on our second strategic pillar, to create standout customer experiences. The past 12 months have seen outstanding delivery from BT people across all parts of the business. As a result, we have record high customer satisfaction, with absolutely fantastic feedback from our customers and a step change in perception across a wide range of measures. Group Net Promoter Score has now increased for the 18th consecutive quarter, testament to the difference that customers feel our products and services are making, even in the toughest of times. The BT brand is at its highest NPS ever, as evidenced by strong BT sales and churn performance. In Mobile, complaints of our EE are the lowest of all the major network operators. And once again, EE began 2021 as the U.K.'s leading mobile network, winning all 7 of RootMetrics' test categories for the second half of 2020. Tomorrow's launch of a U.K.-first Halo 3+, which combines fixed and mobile networks, to offer the peace of mind of a hybrid cable product underlines how BT's customers are starting to benefit from our lead in convergence. In the B2B arena, we're making it easier for customers to get in touch. Our new WhatsApp contact [ met ] channel now has an NPS score of more than 60. Naturally, with end customers relying ever more on their broadband, their expectations have risen. Despite the current challenges, Openreach is working hard to maintain copper and fiber service levels. While quarter 3 total fault volumes were 9.7% more than last year, copper and fiber repair rates were around 3 percentage points better. And in the quarter, almost 90% of customers were offered a first appointment within 10 days, up more than 9 percentage points on the prior year. Turning to slide 7. We connect for good is BT's purpose, and it guides what we do as a business as well as being key to leading the way to a bright sustainable future. We set this out during the quarter at our Digital Impact and Sustainability briefing, which many of you attended. But we'll be measured by actions rather than words. And in November, BT reached a milestone of sourcing 100% of its electricity worldwide from renewables. At the same time, we announced our ambition to move all of Openreach's 28,000 vehicles to electric power by 2030. Of course, all of our strategic progress is being made whilst we work to respond to the COVID-19 pandemic. And I'm extremely proud of the way in which the whole BT team has stepped up. We've kept the nation connected despite the huge increase in demand. There's been a doubling of traffic on our broadband network during working hours. We've done everything we can to support the NHS from new and improved connectivity for key locations, to direct support for patients, such as our Life Lines project, which enables virtual hospital visits via video enabled tablets, and staff with free mobile data from EE. And we're looking beyond the health care frontline to lend BT support to those who need it most. In the past quarter, we've launched our lockdown learning program with free unlimited mobile data, WiFi vouchers for schools and charities and 0 rating at some of the most popular educational websites, all to help some of the most disadvantaged kids stay plugged in to learning. We've also launched our Stand Out Skills campaign. This initiative provides job seekers of all ages with free tips, resources and advice to help them build confidence and stand out in a job search. We haven't reached the end yet, but I would like to thank everyone at BT for pulling together to help support the nation through this crisis. I'll now step briefly through the quarter 3 group financials on Slide 8, which, as I mentioned, were in line with our expectations. Overall, revenue in quarter 3 was resilient at GBP 5.5 billion, down 5% and mainly due to the impact of COVID-19 as well as legacy portfolio declines and divestments in our enterprise businesses, with some offset from growth in Openreach. EBITDA was down 5% to GBP 1.9 billion, driven mainly by the declines in revenue. And CapEx at GBP 1.1 billion was up 7% due mainly to the increased network investment. Our normalized free cash flow of GBP 408 million was up 3%. This was helped by the receipt of a cash payment from a revenue stream monetization. This more than offset the negative cash impact of Brexit planning. We remain confident in all our outlook metrics for this year. And following that cash receipt in enterprise, as I mentioned earlier, we are now narrowing the range of our full year '21 normalized free cash flow guidance to between GBP 1.3 billion and GBP 1.5 billion. I'd also like to reiterate that we expect future EBITDA to increase to at least GBP 7.9 billion in full year '23 and with sustainable growth thereafter. Now moving to look at CFUs, I'll start with Consumer on Slide 9. Overall revenue in quarter 3 was down 3%, the pandemic impact on mobile revenue through retail stores closures and significantly lower roaming. Fixed and other revenue was also down as a result of lower sport revenue from the closure of many pubs and clubs. In a very competitive market, we also chose to optimize our broadband pricing approach with positive results on our customer base. EBITDA in the quarter was down 14% as a result of the lower revenue, migrations from copper to superfast early this year and investment in FTTP growth. We do expect a further impact from COVID-19 in quarter 4. The current lockdown means almost the entire retail estate is shut down. All pubs and clubs are closed. We have fewer upsell opportunities and very little roaming. Postpaid mobile ARPU was down 6.9% year-on-year, driven mainly by the continued mix shift towards SIM-only and the ongoing lockdown resulting in lower out-of-bundle usage and less roaming. Fixed ARPU was down 5.8% year-on-year, primarily driven by lower out-of-contract pricing changes, lower copper pricing and investment in our long-term strategic products as well as continued declines in legacy voice usage. As I mentioned earlier, Consumer has further accelerated its 5G ready and full fiber basis, something it has done while making consistent improvements in customer experience. Lastly, as a reminder for the 25% or so of customers who would have joined us or recontracted since September, we will be increasing their prices by CPI plus 3.9% in April, supporting our investments in market-leading networks, propositions and improving customer experience. The remaining 3/4 of our customers will see a price change in line with CPI or RPI. Moving to Enterprise on Slide 10. Revenue in the quarter declined 6%, mainly from lower business activity and ongoing declines in legacy products. Quarter 3 EBITDA was down 10%, reflecting the lower revenue, partly offset by lower costs, which benefited from our transformation program. We are anticipating an additional COVID-19 impact on trading and business insolvencies in quarter 4 and into next year. And we are also planning some OpEx investment in quarter 4 as part of our transformation program. Operationally, order intake was positive, with retail orders up 8% to GBP 3.2 billion, and wholesale order intake up 5% to GBP 1.2 billion, both on a 12-month rolling basis. Since the relaunch of our Halo Business product last year, 25,000 businesses are now able to stay better connected to their customers when on the move. We've also strengthened our support for SMEs, adding a new mentoring program in partnership with Digital Boost. And we collaborated with University of Warwick and Warwickshire County Council to switch on the U.K.'s first dedicated public 5G network for a connected campus. Lastly, we extended our strategic partnership with RingCentral. This will strengthen our IP voice proposition with new products and services and accelerate the adoption of cloud-based voice products, helping us further extend our U.K. market-leading position for hosted voice. Moving to Global on Slide 11. Revenue in the quarter declined 16% and was negatively impacted by COVID-19, divestments of domestic business in Spain, Latin America and France. And mature and legacy portfolio declines, partly offset by a small positive impact from foreign exchange movements. Excluding divestments and foreign exchange, quarter 3 revenue was down 11%. EBITDA was down 3% in the quarter, primarily reflecting the impact of divestments. Excluding divestments, EBITDA was up 5%. The negative impact of the pandemic on revenue was more than offset by lower operating costs, reflecting ongoing transformation and COVID-19 mitigation actions. However, we continue to see a reduction in our uncontracted spend and a more cautious approach from our multinational customers, resulting in cancellations and delays to purchasing cycles. Obviously, this will impact negatively revenue and EBITDA in quarter 4 and subsequent periods. However, on a rolling 12-month basis, order intake was GBP 4.1 billion, up 1% year-on-year. During the quarter, we completed the sale of some domestic operations and infrastructure in Latin America and France. We also agreed the sale of selected business units in Italy which, subject to regulatory approval, should complete by the end of June 2021. Finally, looking at Openreach on Slide 12. Revenue growth of 2% in the quarter was driven by higher fiber and Ethernet volumes, partly offset by a decline in legacy copper products. EBITDA was up 5%, driven by the revenue growth. Operating costs were broadly flat, with higher service costs, increased FTTP provisions and pay inflation, broadly offset by ongoing efficiency programs. As I've already highlighted, the full fiber build is going from strength to strength. And in December, Openreach signed its third R100 contract, covering the north of Scotland. This extends a long-standing partnership with the Scottish government to connect thousands of the hardest to reach premises. Looking ahead, we aren't expecting any major trading impact this financial year from the latest COVID-19 restrictions. However, we do expect some impact on FTTP and G.fast provisioning volumes, having temporarily paused nonessential work inside customer premises. Our full fiber build remains on track to reach 4.5 million premises by March 2021 despite the latest restrictions. On Slide 13, I want to turn to the fiber enablers, including Ofcom's WFTMR statement, which we're expecting next month. We believe that the majority of the framework will be positive for investment. But we do need more clarity from Ofcom on its approach to assessing our returns. Our planned full fiber build is a very significant long term, more than 20-year investment with a wide range of potential outcomes. Our expected mid-case return is around 10% to 12%, but this return is far from guaranteed. It is vital that BT is able to retain some upside from this level if things go well to compensate for the significant downside risk we are also taking on. Although we have engaged extensively with Ofcom and the dialogue has always been constructive, clearly, we do not know what Ofcom will put in its final statement, which will be published towards the end of March. What I'm sharing with you now is what we're expecting based on the public statements we have all heard from Ofcom. On the indexation of legacy copper services, the premium for full fiber, Area 3 and switchover, if Ofcom regulates as expected, then overall, we believe that these are all supportive of FTTP investment. On commercial deals, it's going to be difficult to sign long-term volume-linked contracts. However, CP's current appetites for the deals Openreach has in the market gives us growing confidence that long-term demand for the product is there. And as copper stop-sells take effect and our footprint rapidly expands, this is likely to increase. We will continue to look at options to accelerate the migration to full fiber, ensuring that we address any constraints from competition law. Unsurprisingly, in a review as complex and wide-ranging as this, some issues do require more clarity. On pricing, we expect Ofcom to confirm the case-by-case approach that requires us to get prior approval for geographic pricing variations and submit some alternative pricing structures to Ofcom 90 days in advance of putting them into the market. Whilst not ideal, we can understand this approach as part of the overall package as long as the new rules allow us to compete fairly with all our rivals. BT should not have to compete with one hand tied behind its back. That same principle also applies where BT Enterprise, like other players, needs to build small extensions to Openreach existing ducts and poles to serve its customers. We firmly believe this additional build should not be regulated in the same way that it would not be for others. And in Area 3, where Ofcom intends to mandate dark fiber, this should be done in a way that ensures that infrastructure builders invest in their own networks rather than use dark fiber for FTTP. We believe that government, too, has a key role to play in helping fiber investment for the country. While government is supportive of investment in the U.K.'s digital infrastructure, the whole industry now wants to see rapid, concrete changes to planning and to give better, faster access to land and buildings. Current restrictions continue to add costs and slow the industry down. And on business rates, exempting the FTTP industry from these for at least 20 years would create a significant benefit to the BT business case. The additional cost of rates is broadly equivalent to reaching around 3 million more premises. Full fiber can help the U.K. to build back better and taxing it just doesn't seem to make sense. Given the importance of building fiber at pace across the whole of the U.K., we would encourage government to allow an exemption of new -- for new fiber to incentivize investment and enable a faster rollout. Without doubt, the area of most intense engagement between BT and Ofcom has been on the fair bet. This is absolutely critical for our investment. Following Dame Melanie Dawes' speech on the 3rd of December, I think it's very reassuring that Ofcom understands and accepts the principle of the fair bet. Ofcom stated that it would not expect to intervene during the investment cycle in a way that hampers investment and that further regulation was not expected before 2031, at the earliest. The question is whether the statement will be clear enough on translating that intent into the specifics we need. We are making a decision now on a massive fiber investment program based on the risk we see today. And this needs to be compensated with upside kept in play by any regulation Ofcom may impose in the future. We cannot expose our investors to the risk that regulation will be applied on the basis of 2020 hindsight. So we need Ofcom to be clear on whether, when and how they would regulate FTTP prices in the future. At the end of the day, it's for Ofcom to choose what is in the final document and for government to decide how they support full fiber investment. But their decisions will have an impact on the pace, sequence and profile of fiber build by BT and by others. For BT, we are encouraged by much of the regulatory framework. But we do need further clarity, especially on the fair bet before we can finalize the pace of build and importantly, the mix between different geographies across the U.K. So to summarize on Slide 14. Despite further lockdowns, third quarter group financials were in line with our expectations. And we are reiterating our outlook, except for normalized free cash flow where we are lifting the lower end of our range. We've maintained the pace in our modernization of the business and announced 2 structural changes, which will strengthen BT's foundations in the future: a new digital unit and a new procure code, with the former taking on lead responsibility for systems, process, and business transformation. And on Ofcom's WFTMR, while we think the framework will be largely positive for investment, there are some key points of clarity still required, particularly around the fair bet to unlock the fiber investment the country needs. And we must still see concrete progress from government on the things they can do to support the fiber rollout, especially on business rates. As I said at the start, BT is absolutely ready and wants to fiber up the U.K., but we need to get those regulatory and policy enablers over the line so that we have confidence about our ability to earn a fair risk-adjusted return for our shareholders on this massive GBP 12 billion investment in FTTP. Finally, we are starting to make excellent progress in some of the big issues facing BT. It's good to see our differentiated propositions starting to flow through to customer numbers. And those customers are telling us their experience has been getting consistently better. I'm really excited about the long-term prospects for this great company. So again, thank you for engaging with us today, and we look forward to answering your questions. As in previous sessions, could you please limit your questions to one per person to allow as many people as possible to ask questions within the time we have. So with that, could I ask the operator to please open the lines.
[Operator Instructions] And your first question comes from Michael Bishop from Goldman Sachs.
I just wanted to pick up on some of your comments around sort of tougher 4Q and I guess also with a view into FY '22. It felt to me like you are flagging in Enterprise, you're now sort of taking some provisioning for increased insolvencies. And then there was secondly some comments around potentially tougher trends at GS that you're expecting, again, I guess, in line with the recent [ teaching ]. And then thirdly, sort of picking up on the Openreach point around provisioning volumes. Could you just sort of walk us through and make sure I haven't missed any in terms of thinking about that Q4 impact? And then also just how you think about those things going into FY '22 as well?
Sure. I mean, let me give you a couple of early comments, and maybe I'll just -- since there are important questions, I'll get Gerry to make a couple of comments on enterprise and Bas on Global and then Clive on Openreach. I mean, in general, what we're saying here is when we were looking at our [ sort of ] planning horizon, we probably assumed a shorter, sharper lockdown what we did and more problems at the front end with a sort of recovery. As it turned out, with all the support mechanisms that we've seen for furlough and business support programs that the government have put in place, I think it's been a sort of flatter line as it were. So we're hoping that will bounce back. But nevertheless, there are businesses that are going to go insolvent that we planned for in the future. So we've put that through in our thinking.And also, in general, and Bas can comment on this, in Global, for example, many customers are not doing things in the short term. They're not doing projects. They're deferring those things. But the order book for both Enterprise and Global is actually encouraging. As I said, they're both up across every element. So that's encouraging. And the provisioning volume on Openreach, and Clive can talk about that. We're going to come off a little bit in this quarter because of the lockdown, and we're not going to people's homes. But we see that picking up pretty rapidly post the lockdowns, and we're hopeful that will sort of start happening in our first quarter of next year. So why don't I ask Gerry just to give his perspective on your question around enterprise and then Bas and then Clive, if that's all right?
Yes. Thanks, Philip. Michael, yes, just a few things on Enterprise. I think it's so outlined. I think we're eking out the trading. Definitely, we're seeing slower trading, but there -- it's mainly -- we're focused on trying to make sure we're addressing where the deals are, making sure that we're not focused on sectors that are problematic. So whilst we're not seeing massive, large deals, we are managing to keep our head above water on our planning for trading by just being much more focused about where the deals are. So -- and I think our view is broadly that will continue in Q4. However, the continued lockdown certainly does give us some concern in terms of just how the material COVID impact could be. We have seen in Q3, Q2 then Q3 is that there is an increased usage. I think I said in previous quarters that our issue has been largely usage as opposed to -- we've certainly seen insolvency, but it's not -- it's not as bad as we feared. It's mainly usage is the problem. I think our concern is that we get neither the Q1 effect than a Q3 effect, whereas usage starts to tail off a bit. So there's those 2 dynamics. I think if usage goes off, it probably would indicate that probably the selling would be impacted a bit too. It would also be affected by retail potentially going through. But we have got our fears, we are looking at just how we provision for that a little. It's not a massive amount. But at the same time, we're going to take the opportunity to invest in a few things. So we are going to try and underpin the fear in Q4 in terms of some of the weakness by doing more marketing. So we're investing in marketing. We're also going to invest in some of the digital capabilities. Because what we saw in Q3 was that once we had the lockdown in November, we were able to offset that slightly by doing more marketing and block trading and Christmas deals and so on. So we will do more in Q4 than anticipated. So it's a bit of investment, also a little bit of concern about the ongoing lockdown. Hopefully, that answers your questions, but I'm happy to expand a bit further if needed. I'll hand over to Bas.
Yes. Thanks, Gerry. Yes, Michael, just 2 things. One on trading and one on cash. I think trading is, as Philip said, during lockdown, we expect that trading will be down simply because customers spend less on the fact that they're a bit prudent with their expenditure when they're not in the office. We do expect -- and this is also what's reflected in the order book at the moment, that once lockdown is lifted in some places in the world, we already see this -- and customers come back to the office, there is an accelerated demand for new digital technology where customers will go to the cloud with their applications faster than we normally expect and we'll also focus, and we -- and we'll not compromise on the security they will allow -- or cybersecurity threat they will allow on their network. So that will make a bigger and faster move from our mature and legacy portfolio to our growth portfolio. Now that will clearly have some effects on our revenue, where that not necessarily mean our revenue will go up, but it will mean that we'll be faster in utilizing and scaling our over-the-top platforms. The other thing I would say is on cash is yes, there are some customers that have asked for deferrals, particularly in the harder hit industries that we service like leisure, airlines, et cetera. But what we do see is that payments are completely in line with what we have in the new credit arrangements. So in that sense, I'm not so negative about the cash effect of this in our industry. Handing over to Clive.
Thank you, Bas, and thanks for the question, Michael. You asked about provisioning volumes in Openreach. So the effects of lockdown goes like this when it comes to provisioning. The bulk of our provisioning work is on VDSL services. So that's fiber to the cabinet. That work is carried out at cabinets in the street. There is no impact whatsoever on that work through the lockdown period for Openreach and for its customers. The portion of the portfolio that is impacted is FTTP provisions and G.fast provisions. And some portion of those, not all of those, but some portion of them, we are appointing into the future. So we took with you early on that the lockdown would start to release in March. That might have been slightly optimistic. It might be towards the end of March would be my revised forecast now. So what we're seeing right now is some of the FTTP orders, in particular, are being post-dated for installation into March and into April. So you'll see an unwind through completions in March and April on orders that were taken in January and February. So that's the effect to look out for. As Philip said, we are not signaling any material change to the Openreach trading numbers through Q4. He made that clear and that is absolutely correct.
Great. Thanks, Clive. Michael, just one other point for me, and then I'll ask Simon to pick up on your provisions. I'm sure people have questions along these lines. So I think just stepping back a little bit, what we're saying here is it's been a difficult time for everybody, a lot of uncertainty, clearly. Actually, the business has delivered extremely well across all the fronts with its customers and the sort of Net Promoter Scores are really, really strong across every division. I'm really pleased. It's a testament to an enormous effort by everybody in BT to deliver for our customers under very challenging circumstances. So sort of tick on the deliver for customers, it's very rewarding in difficult circumstances to get such high praise from our customers. I mean, it's not always perfect. Of course, we make mistakes. We're a big company with 30 million customers. So it's not always perfect. But the numbers speak for themselves, that's great. The business is under control. The focus on cost has been immense to make sure that we've not spent any money that we don't need to spend to deliver what I just described. We've continued to invest very heavily, build fiber, 5G, all the stuff you know about, such that we -- and the way that Simon's managed the cash flow is really, really important as well. So we're absolutely comfortable with where we're going to land this year. And I guess, more importantly, we're ready to come out of the blocks post pandemic. So the exec team, all of whom are on this call, spent a lot of time, yes, this planning for the landing this year and delivering what I described. But also to make sure that we're on track to bounce back when we come out of this pandemic. So again reassuring you that we thought very carefully about how we put plans into the marketplace that deliver the GBP 7.9 billion EBITDA in 2023. So that's our focus. But the business is absolutely crystal clear on the plans and crystal clear on the strategy, which is very helpful when you're in the middle of a very difficult circumstance. So I think we feel good about the next few years. That GBP 7.9 billion EBITDA target is absolutely our focus because it allows us to pay the dividend, as we said we would. And also fund our peak CapEx levels behind the sort of fiber and 5G and modernization programs that we are making such good progress on. So we're cautiously optimistic and pleased with where we are now. You did ask a question specifically on provision. I don't know if, Simon, you want to say something on that? And then we'll move to somebody else.
Yes. No, very quickly. We took additional provisions at the start of this financial year to reflect the risk of increased insolvency, both in the B2B and B2C space for the year. Actually, we've not had to utilize very much of that provision. And so we're still carrying most of it. But that simply reflects our assessment that the continuation of government support has deferred the sharp rise in financial insolvencies. And therefore, we anticipate that as government support is removed, we may find that increasing -- insolvency increasing, but we have taken provisions against that.
Great. Thank you, Simon. So I think Maurice is next, I believe.
Just maybe just going on back on to the -- your comments on regulation and Ofcom. I mean, you've been pretty clear in terms of what you want, and you have been for some time. I guess, Ofcom did say -- I mean, you referenced the speech from Melanie Dawes talking about minimum 10 years regulation. If from your comments today, is it more about you just wanted to write that down, i.e., you have in writing those commitments? Or are you looking for a more sort of harder set of terms in terms of how they see it like a higher return over a longer time period?
No, Maurice. Great question. We, in fact, we want it written down so there's no doubt because it's such a long period of time. I won't be here in 10 years, and I want to make sure that my successors don't look back and say we didn't concentrate on things that really matter. And when you're making an investment of this scale, GBP 12 billion of our shareholders' money, I need to feel comfortable if we're going to spend it really quickly, and carpet the whole country in fiber, there can be no risk for our shareholders that someone is going to change perspective in 10 years' time. So it's exactly as you described, writing down what we think is entirely fair, which is us, centrally planning for 10 to 12 percentage point return with a bit of upside so we go particularly well. But obviously, there's downside, we all know, because it's a risk exercise. So Maurice, that's right. Write that sentiment down so there's complete clarity of how, when, under what circumstances Ofcom would consider regulating in the future. And the final point to make is, I'm just looking for some symmetry. We're dealing with a 20-year investment here. So we need to see a regulator who's willing to recognize that and not force us to take a different profile or a different pace or a different sequence because we're uncertain as to what might happen, and we're not going to put our shareholders at risk for that. We can't.
Is [ COVID ] business rate a showstopper? I mean, I'm sure the government is looking at ways to raise money to fund the COVID-19 as opposed to give away more concessions. Is it a showstopper for you?
No, it's not a showstopper. It's just -- again, I think again, Maurice, a good point. Ultimately, the government has to prioritize, and we're all under pressure, of course, right? They have to prioritize where they spend the money. It's more -- it seems counterintuitive given the kind of productivity gains that are in the business case for the country. And I think there's some BCMS research that there's GBP 230 billion worth of productivity as a result of 5G and fiber. I think from memory, it's GBP 70 billion from fiber. That's not in my business case. That's in the government's business case. So in my mind, getting this digital infrastructure there as quickly as possible is essential, and therefore, not taxing it would make sense. But of course, they've got to make their judgment as to what's what the priorities are. So we accept that. It just means if we weren't being taxed, by definition, those notional 3 million homes, which it represents, would arrive earlier in the bill program. I think we've now got Nick. Hello, Nick?
Philip, sorry, do you mean me or...
Who is that?
It's Nick Lyall from SocGen. On the SMEs, do you mind if I just come back to that SME point? You mentioned, I think, in your answer to Michael, about your thinking for next year. Now it doesn't sound like there's many bankruptcies at the moment because of the furlough scheme, but that's coming to an end, say, in 1.5 months' time. So what is in your thinking on SMEs? And does the approach you've put in place under Gerry maybe change under Rob? Could you discuss that a little bit?And also, how easy is it for you to remove OpEx associated with those SME contracts? Because I think Simon has mentioned in the past that the gross margins on those contracts are also high. So could you just run through sort of what you expect and what you've added into to your thinking, please?
Yes. Firstly, to say, look, I mean, things won't change massively in terms of direction as we pass from Gerry to Rob. I mean the handover has been handled exceptionally well and very smoothly. And so Gerry and Rob would both give you the answer I'm about to give you. So -- because we're totally aligned on that. And the first thing to say is the SME segment is a massive opportunity for BT. And I'm just talking in general over the next few years with a whole host of reasons for that. What's our approach now? It sort of goes into sort of, I guess, 3 words. First is help. We're helping them wherever we can, and the SME support program is a part of that. So helping where we can right now. Be conservative, is the second word. So we're conservative in our planning assumptions because you're right, there will be some insolvencies. But equally, there's going to be a big bounce back. I mean, I think most commentators would accept that more than likely, we're going to have a very significant bounce back. Now how sustainable that is will depend on loads of things. So we see the third word, which is opportunity. We see massive opportunity in the SME sector, but we've got to get the timing right. So expect us to see more new things coming into the SME market over the coming years that takes advantage of the opportunity that is presented to us. So -- and again, Rob and I have already talked about that in quite a lot of detail of how we deliver some exciting things into that segment that Gerry is effectively handing over to Rob right now. So a lot of work to do in there. And I guess in terms of the -- just to reassure you, we have thought carefully and we've analyzed very carefully how the market will evolve and -- but there is a degree of uncertainty, which is what you're driving at. Of course, no one knows for certain what's going to happen over the next 3 to 6 months as that furlough scheme and as the support schemes come off, but we're hopeful that there's going to be a bounce back.
On the cost, Philip, I mean, the -- how easy is it to cut some of the OpEx associated with the SME business? If you find that, that 20% of SME revenue that you're worried about in risky sectors in Enterprise is very -- is difficult. Can you cut OpEx back quite quickly even more than the transformation program expects? Or are you pretty stuck with that Opex?
Again, what I'd say is, I'm very, very happy with what we've done so far on cost. And hopefully, you can see that, right? We got on it very, very quickly. And the reason I'm hesitating is it's about a balance. Because actually, the irony thing -- the irony is we're investing quite hard now in the SME segment in preparing for the new businesses that are going to come across as a result of the economic recovery. And we're thoughtful, and as I said, conservative on the assumptions. But we're trying to find a way of investing in that segment. And maybe that will cause a bit of pain in the short term because it's -- the demand is not there in the first few months. But you expect to see more marketing and more investment into the SME segment to provide what I talked before, which is help and assistance, and there are lots of different things we're doing. Because that will provide a good long term effort. So it's not easy, as you well know, to take out costs in this kind of business in the very short term. What we need to do is keep it under control and plan for it, and that's what we're doing. I hope that helps, Nick. I can't give you a specific answer because it depends.
No, understood.
And your next question comes from Paul Sidney from Crédit Suisse.
I had a question on Openreach. So Openreach total lines have been broadly flattish year-on-year for the past few quarters, around sort of 25 million. I was wondering, do you think that despite the likely economic headwinds, competition from both unlimited mobile data plans, fiber challenges, that this sort of line number can remain broadly stable over the next few years as fiber is built out and customers value their broadband more? And obviously, it's pretty crucial, that overall line base for Openreach. So it would be great to get your comments.
Yes, I'll give you a very quick answer, and I'll ask Clive to give his view. I mean, the short answer, to my mind is, look, we are very encouraged by the line performance. And I think what you're saying is actually spot on. This -- the pandemic has underlined the importance, clearly, of connectivity, of our core business, right? So we've seen more people take up these services asking for higher speeds and more capability and better WiFi in the home and all the things you'd expect. So I think there has to be a perspective that says, if you're in this kind of business and you're the outright market leader, as we are, it's got to be good news. Having said that, the market is going to be very competitive as the full fiber build takes off, we're expecting a real proper competitive market out there. So inevitably, I would suspect we will see some line losses. But I would like to minimize the number of line losses we have to the very smallest number we can possibly get away with. So Clive, what do you want to say?
I want to say the following, please, Philip. And I think we will see some number of line losses. And that is a natural -- that naturally follows because of the sheer volume of build by other fixed line infrastructure builders. So the alt nets and Virgin Media. So we will see some line losses. But I'd add to Philip's point, as we move our base to fiber, we will command higher ARPUs and we will do that because the product is simply superior. It is much more reliable. It's low latency, it supports very high speeds. So I expect higher ARPUs to be the sort of other side of that coin, Paul. And then I think I would add one final point, which is that we are moving into a world of ubiquitous connectivity. And the way I encourage my team to think about it is that today, we sort of think about it [ constraining ] by the number of premises in the U.K., which is about 32 million. In an Internet of Things world, there will be many more endpoints than simply homes. So we have to develop opportunities to sell to those other endpoints that go beyond buildings in the U.K. So that's the challenge that we will rise to.
Very good. Thanks, Clive.
And your next question comes from Sam McHugh from Exane.
I'm actually going to keep it very, very simple. On wholesale mobile, I can see there's some pretty spectacular growth happening in the wholesale mobile business right now. I wonder if you could just comment on whether that's kind of volume driven by Virgin Media? So how much we can expect it to not follow through to next year? Or how much is being driven by other partners?
Yes. Great. Thanks, Sam. Gerry?
Yes. And just -- I don't think I'd want to get into specifics around any of the wholesale partners. Just a couple of things I'd say about wholesale numbers. Just given that these do impact competitors, we do give the numbers a quarter of years. So what you're seeing is actually a quarter out so that we don't -- it's quite often some of the partners in the MVNO give the results after we do. So we've always given those a quarter out. So what you're looking at there is essentially over 3 months ago. We actually saw volume across a number of partners, I'd say there. And so we saw that growth across -- it wasn't just one partner. I don't think I really want to say much more than that actually with it. Otherwise, I'll be giving away what they've done in the last quarter.
Sam, is that okay?
Yes, that's fine. Waste of multiple questions, sorry.
I think we'll going to John next.
So I wanted to ask, please, about alt net competition. Just now, Philip, you said that you expect a "proper competitive market" going forward with regard to Openreach lines and service. And given this, could you sort of lay out why it is that do you think you actually have a choice but to build like fury going forward, given that there is a sort of long list of alt nets, well financed alt nets that would happily sort of displace Openreach if you sort of don't build as fast as you can?
Yes, John, look, it's a really important question. Look, I think you're right. We don't have a choice in one regard in that, clearly, the new technology, the best technology is FTTP, right? So that -- the first thing is that we know we're on to something with this technology, and there's a lot of people thinking about and actually building. So no, you're right, we're going to build FTTP footprint. The question isn't whether we do or we don't. The question is how much, where and when. And so if the -- and let me paint a worst-case scenario more to explain it rather than I don't think we're anywhere near this. But if wording in an Ofcom statement is not carefully thought through, you could lead to unintended consequences. So for example, if one of the outcomes was very strong competition in all areas, we would not build in certain places because we might be deemed to be too successful. So what we don't want is a statement that encourages everybody to build as quickly as possible all in the same place. By the way, if we did that, I think we'd do extremely well. If we're all building in the urban areas all the time, with Clive's expertise and his team who do a great job with the cost profile they have, with the expertise they have and the speed in which they can build and the quality. And again, that's really, really important, the quality of our build is second to none. The cost profile is extremely competitive around the world, let alone in the U.K. So we think we can compete very effectively. But the regulatory framework should allow other people to build in a geographical spread way as well. So there will be places where people build, and we don't get there. And in which case, that's where the line losses might occur. That won't be massive numbers in the scale of our business. But they will be significant, potentially, for others. So that's what I'm getting at. So yes, we're going to build, we're going to build this 20 million. But I'd like to build it absolutely at full pace and across the whole country and build in those rural areas. And what I'm trying to avoid is an answer that's pretty good for BT, financially, and I think most scenarios will be. But I'm trying to avoid it not being great for the country and not very good if you live in the country. Does that make sense, John?
It does. If I may, just -- I mean, do you think Ofcom would allow you to charge a price which is in proportion to a consequence of your significant market power? Because you would blow all the competitors out of the water, if that's the case. So although you're more competitive, will you be able to take advantage of that lower cost base?
No, I think you can see what we're doing now. I mean, look at the -- as Clive said, we are -- look at the numbers. I mean, the numbers are actually really encouraging for everybody, right? And partly probably because the nature of what's happening and what's happened in the last year. But we're building at 1 every 15 seconds. That's massive. We're connecting double-digit thousands a week. Orders are coming flying in as well, and it's at a price premium because it's a better product with lower fault rate and much better speeds and lower latency. So -- and the thing -- the central point here, which I think is really, really important, is in the U.K., you, as a customer, get exceptionally good value. I mean, you can get 100 megabits for less than GBP 1 a day. We just think of everyone sitting at home, working, educating their kids, watching films, playing games, less than GBP 1 a day. So I don't think the regulator or the government or policymakers should be worrying about value for money. We're very competitive here. What you can see is there have been challenges about returns in the industry, in Europe and in the U.K. And I don't think we should be wasting our time arguing about what kind of returns we make as long as we're in the reasonable category. And I think for this kind of investment, 10% to 12% central case is more than reasonable. And if the regulator delivers what I think -- I'm hopeful they will, you'll get a very vast, fast build by us and many others. The country will get the digital infrastructure it needs. The customers will get exceptionally good value for a brilliant product, and it will increase the productivity of the nation as new businesses and new ideas and new concepts come alive when people realize the capacity, the capability of this new technology.
And your next question comes from Mandeep Singh from Redburn.
Nick apologized that couldn't be on the call. So the question I'd like to ask is really on your sort of revenue trend. You sort of -- if I compare BT, and I'm sure you guys do benchmarking as well. So if I look at your revenue trends and EBITDA trends, the rates of decline at the group level are -- if we exclude Telecom Italia, which has a new entrant called Iliad, are probably the worst in Europe. And I understand that you're one of the few incumbents that have invested in premium content, and therefore, I understand the impact of pubs and clubs. But COVID lockdowns, roaming impacts, insolvencies and so on and so forth, are not unique to BT. So when you do your benchmarking, what do you think sort of makes BT stand out as why you have some of the worst revenue and EBITDA declines amongst your European peer group, aside of just the pubs and clubs impact? Is it because you have more legacy in Enterprise? Is it you have more legacy in Consumer? Is it because your prices were too high? Can you just sort of help us understand what the sort of puts and takes on why your revenue and EBITDA trends are so good compared to your peers across Europe?
Yes, Mandeep, well, thank you for pointing that revenue trend out for us, by the way. I appreciate it. No, joking aside, look, of course, you're right. And of course, we totally understand it. We see it and we compare, as you'd expect, to everybody else. So you're absolutely spot on. I'll ask Simon to give his perspective in a minute. But I mean, simply, I think you sort of answered a bit your own question to a certain degree. It comes down to sort of 4 main buckets, really. There's the sports, pubs and clubs, you're right. There's the roaming, of course. But other people have roaming, you're also right. There's a lot of legacy stuff, and that's very important. You know we've talked about, particularly in Enterprise, a significant headwind, which will roll out over the next couple of years. But also in Consumers as we deal with some of the legacy issues there, as you well know. And again, with Global as well, right? So there is a -- I suppose, the fourth point, which I sort of point to, which is really timely, of course, is regulation. And that's linked into the legacy. So we do have a particular regulatory framework in total here, which has been very challenging for BT for the last few years, and that leads to some of that legacy decline that we talked about. It's not all about the regulatory agenda. But when you combine all those things, we end up with a revenue profile that we've -- that you've just described. So I mean, Simon, do you want to add anything to that?
No, I think you've picked up the COVID-related impacts to which we are as exposed as any amplified probably by the sport business. We do have still a meaningful legacy voice portfolio, which is running off and getting substituted by digital products, and we're probably a bit further down in the journey than some. We've been very clear about that. We've always built that into our plans and forecasts. We do have the regulatory pressures. And linked to that, we've been very proactive in addressing the customer fairness agenda. And you can see that, that has had impact on our ARPUs over the last 12 to 18 months. But you can also see that it's had a marked impact on NPS customer experience, churn and therefore, prospects for the future. The final point I would make, Philip, is that we have historically had a significant amount of revenue in lower-margin wholesaling customer equipment activity. And we have made an explicit decision to pull back on that business. So if you look at Global, as an example, its headline revenues have dropped by more than GBP 1 billion over the last 3 or 4 years, its profits have gone up. So I think that's the other point I would factor in. The final thing probably to say is that if you just look at the year-on-year comparators for this year, yes, we have had significant top line revenue pressures for the reason that we just described, GBP 1.1 billion down. Actually, the profit is down less than GBP 300 million. We have mitigated that very significantly through cost action and also because quite a chunk of the revenue decline is generating very little gross margin. So that's the summary.
Simon, really helpful. And Mandeep, what we're saying here, again, just is we've got a trajectory. We've got a path to GBP 7.9 billion EBITDA, and we've demonstrated what Simon just talked about, which is the ability to control our costs, but also early signs of modernizing the company. So you can imagine on a lower cost base, taking out this GBP 2 billion that we've got to do over the next 5 years, 4 years now probably, you start to see the end of these revenue trends that you've just so highlighted, suddenly, you get a different business. And that's our aim over the next few years. Thanks, Mandeep.
And your next question comes from Robert Grindle from Deutsche Bank.
Question, question for me on Consumer broadband. The churn seems to have just tweaked up a bit in the quarter, a bit more than what looks like is the normal seasonality. Is that a COVID backlog thing or something else? I did see Plusnet complaints spiked a bit in the latest Ofcom data. Also, do you think there's any early impact on the price rises you're planning? There has been some press around that. Even got into the FT last weekend. So yes, a comment around consumer broadband churn, please.
Yes, Robert, I'll get Marc to talk about the churn and Plusnet and the price rises. Just one comment, though, more generally. I mean, challenging times, but I have to say, the customer feedback on Consumer augurs really well for the future. So the level of satisfaction is growing. The NPS is growing, Marc and his team have done a fantastic job in delivering for the customer in these very difficult circumstances we've talked about, the demands are so much higher. So I think it augurs extremely well. And actually some of the sort of the customer profile we've now got, I think, is very encouraging, notwithstanding your point about a little change in churn. But I'll let Marc give his perspective on that.
Thanks, Philip. Yes, nothing to get concerned about. It's a small tweak up. Our trading performance is actually, over the last couple of quarters, been very, very strong on all of our brands and net additions on strategic networks like full fiber and 5G, very strong. So I'm actually really pleased with the trading performance. We have, as you can see in the ARPU figures, invested a little bit more to improve our competitiveness, and that has helped the base growth. You're right on Plusnet, we have had some issues we've been dealing with, but the team have got that under control now. We can start to see the complaints coming down and the customer satisfaction improving. And confident that this trend is set to continue because the customer satisfaction results we're seeing is all pointing to a much more stable base and a happier base for the future as we go into next year. So yes, we're battling with another quarter, probably Q4 with some more COVID headwinds, all the things we know about. But as we move into next year, I'm very confident of the growth trajectory we're going to start seeing. On the price notifications point you also raised. We've only just started the notifications, actually. So it's probably too early to say. We started notifying the EE base, BT base starts in volume next week. So -- but no, from the customers, and it's well north of 1 million that we've already notified, no significant impact there, and it's a pretty standard practice on the mobile side, and I'm not anticipating any big issues on the fixed side either.
And your next question comes from Charlotte Perfect from Arete Research.
My question is quite a long-dated question. In terms of -- I mean, of course, there's a lot of focus around the 20 million footprint and the regulatory enablers for that. Just trying to get a sense of how things will look, and it builds on John's question from earlier, actually, how things will look outside of your core footprint where alt nets builds and you don't? I think you previously mentioned that you are potentially open to partnering with alt nets on builds in more rural areas. But also a question around Consumer and whether Consumer would [ wholesale ] from other CPEs, where they have fiber and where you don't?
Yes, Charlotte, thanks for the question. Again, look, I think you're right to point it out, we have a 20 million footprint planned over the next few years. There will be places where we don't get before someone else gets. And so we need to think through how we handle that. I guess I'd just point out one other thing in terms of the way most of the volume will go, it will go into places which are competitive. I think we're going to see the vast majority of build in places that are economically attractive. And there is this opportunity in the cities, by the way, of course, which all of us building fiber will go for. So I think there's a strong recognition that there is 1 player who has, in cities, some speed advantages today. So I think there's huge opportunities for Openreach and others to build in those cities and get some good outcomes there. So -- and I think, again, to my earlier point, I feel really good about Openreach's ability to compete in those areas and deliver for all its customers, Sky, Vodafone, TalkTalk and obviously, BT Retail as well, right? So I'm confident about that. I think as time progresses and we see how things evolve, I think it's possible, and we remain open mind about BT Consumer and BT Retail extending its partnership with other people. But I think we just need to get going on post the WFTMR and see how things play out. But again, I would feel that BT and Openreach has a clear plan and is -- I think there's enough indication of the success of Openreach now in the build and also on the connection. So I'm really pleased there. So we're open minded. We'll see how it goes. I can see a situation in 10 years' time where it is possible we will be buying from other people, but there also might be a consolidation in those other people at some stage as well because not all will be successful.
And your next question comes from Akhil Dattani from JPMorgan.
Just a couple of clarifications, please, Philip. You obviously talked a lot about the WFTMR. I just wanted to really clarify exactly what you're expecting us to get out of it because you've obviously talked a lot about the fair bet in returns? So do you actually think that Ofcom will come out and explicitly talk to the ranges you've said around returns to actually get hard numbers rather than rhetoric? And linked to that, you said one of the harder things is going to be the long-term contracts, and that might be more of a challenge. If that's the case, how do you think about your ability to definitively have confidence that you'll deliver the returns you want when there will be overbuilders out there and you're not able to lock in your CPEs and protect your investments for future returns? And then the only other quick clarification, just to a prior question, I just wanted to understand is, as in the prior question we were talking about declines now and then the recovery. I just -- it's a quick question on Consumer. Just to understand why are the fixed line and mobile was falling 6%, 7%. It seems quite a bit sharper than the peer declines we're seeing. So just any color on the declines would be really useful.
Akhil, thanks for that. Marc can handle those Consumer questions in a minute, and then I'll get Cathryn to sort of answer the substantive part of your question on what we expect and what we'd like. I mean, my general answer just is to say on the build. I mean -- and it's a general point, so don't underestimate how difficult it is to build a full fiber network at pace at a very high-quality at a acceptable cost profile. And particularly in those areas that are not as straightforward as the very, very easy, straightforward urban area. So that's the first thing. Don't forget that Clive and his team have been testing and modeling and trying and practicing the exercise of building what is not an insignificant engineering exercise. So it's all very well talking about it, but actually doing it, and I've gone out myself many times to see it being done, it's not as straight forward as everyone would hope or expect. So -- and the great news for BT and specifically Openreach is that they've spent a lot of time refining it, and I think they've got very, very good at it with one challenge left, which is provisioning. But that provisioning challenge is very significant for Openreach, but it's not unique to them. So I think you've got to remember that by way of background. So what we're saying, back into the FWMTR, is we want to make sure that the articulation they put in place encourages the right outcomes for everybody, not just BT. Because my aim is, yes, I want to do right by BT and do right by our shareholders. I have to, that's my job. But I'm also keen to make sure the country gets great digital infrastructure, both in fiber and 5G because that's what we all need. And I want to make sure that we play our part in that. But we can't, if the circumstances or the regulatory framework prevents us from making the decisions that we think we should. So let me -- I hope that makes sense to you. Let me get Cathryn to make some comments on your specific question, then we'll go to Marc to answer the Consumer points.
Akhil. Yes, it's been interesting on this. I mean there are different layers, if you like, of specificity that Ofcom can provide on the question of the fair bet and how it will assess our returns. And if you like, the sort of top layer is the layer of sort of principle where they can be very clear what principles they're going to follow. And I think you can see that they have been pretty clear about that, that they've been very consistent in saying that they will honor the fair bet. They've been very consistent in saying what they think the fair bet means in the sense that they need to leave upside in play that will compensate us for the downside risk we see at the time we make the investment decision. Not only have they been consistent in that, you've seen Melanie in her recent FTTH speech, confirming that as the new Chief Executive of Ofcom, she also believes that fiber investment must be a fair bet and she did a little bit more to unpack how she sees that principle. So all of that's good. And we're very confident they will say that in their documents again because they've said it consistently. And then the next layer of detail that they can go to, which we are very keen to see them go to is the layer of sort of methodology, what do those principles mean in practice? And in respect to the fair bet, that really collapses to 2 areas. One is their approach to calculating our weighted average cost of capital for the fiber build. And the other is their approach to assessing that premium, if you like, that uplift on top of the cost of capital that they need to leave in play to compensate us for the downside risk that we are taking. And again, I'm hopeful that they will specify their methodology, how they will approach those calculations in the document. Not least of for the reason that Philip sets out, it's not only important for BT, but that is important for everybody investing in fiber. And it's important so that people have a reasonable ability to predict where, when and how Ofcom will intervene with its regulations. So I think that, that's quite likely. And it will be great also if they could stay in that sort of methodological approach, the kinds of risk that they would expect to see us compensated for if they do come in and impose further regulation of our fiber products. And then, of course, with the final level of detail that they could get to is numbers. They could actually tell us what level of return in numbers they would be content for us to earn or indeed in numbers, either what the premium over the WACC is that they will be content for us to earn before they came in and regulated and that they would leave in play with their regulation. And I think that's harder for them. That's harder for them because it's difficult, I think, for the regulator to make those kinds of calculations, especially about the premium over the WACC. It will be great if they did, and it would be great to have that level of certainty. But I think it's also worth saying that there are plenty of people who are experienced managers and indeed experienced investors in regulated businesses who are used to not getting clarity on the numbers, but actually getting clarity on the methodology and the approach and using that to get confident about investment decisions. So I think that's probably all I'd say at this stage.
Thanks Cathryn. Hope that's okay, Akhil. Marc, do you want to just handle the specific Consumer questions?
Yes. Let me start with fixed because I think it's important to split out the fixed business and the mobile business within Consumer. I think if we start with fixed, just -- I think it's helpful to remind everyone on the call that this year was -- and isn't just a year where we're dealing with COVID impacts, but it was also a year where we said we would invest a lot more than we have done to lean into the fairness agenda and deal with a lot of the issues that were impacting us on front book, back book, customer loyalty, dissatisfaction complaints, et cetera. So there's been investments there that have impacted ARPU, but do set us up in a much better way for the future as we look into the next financial year, and I'll come on to that. So we've been migrating copper customers to fiber. We've been pricing down those copper customers that aren't in fiber areas. We've been introducing out of contract price caps for customers, millions of customers and leaning into best tariff notifications, end of contract notifications and so on. Whilst we've also been investing more in service, onshoring service, bringing the fixed business into retail, being much more proactive about the service that we give our customers, supporting vulnerable customers through the COVID period. And we have also invested a little bit more to sharpen up our pricing to be more competitive, particularly on building a more strategic base of full fiber FTTP. And you've seen in the results, a record number of full fiber connections there and really high satisfaction levels from our customers with those products. So there's all those dynamics going on within the fixed ARPU. But I'm confident we've got the equation right between volume and value, and I'm really happy with the fact that we have invested in the fairness agenda and significantly closed the loyalty gap that we have before, which I touched on in the investor briefing. And I think that sets us up really well for the future, and I'll come on to that. In mobile, very different story. And we don't split out the E unit within Consumer for you also. I can understand why you're asking the questions. When I look at the E unit performance versus peers, I'm confident it's performing pretty consistently with peers, both here and elsewhere. It's important to remind everyone, we are a big player in the handset market. We tend to have the more valuable handset customers on our base. So any shift in the handset market impact us more than some of the smaller, more online SIM-only digital players. And when retail is closed, and we saw this in the first lockdown, where obviously we're seeing it in this lockdown. It does reduce the size of the handset market. So we can see the handset market being more or less 1 million or so transactions down. And of course, the growth in SIM-only. So that impacts us. We're seeing handset customers hold on to their handsets for a bit longer. The replacement cycle, we think this year is about 4 or 5 months longer than last time. We've also, as a reminder, we've exited Carphone, Dixons Carphone, so that gives us short-term impact, but that's beneficial for us in the long term. And because we have the more valuable customers who tend to travel a bit more, we are impacted a bit more, I think, on roaming out-of-bundle than others as well. And of course, retail being closed during the quarter, we're in -- we expect these trends to continue. But I think looking forward, what does all of this mean? We've got a much healthier base to build from; record numbers of full fiber, 5G ready base north of 2 million. We've got the pricing model, which we reminded you, 25% of our customers on the CPI plus this year there's going to be 3 -- more or less 3x that amount in 12 months' time, going through the CPI plus, and we see a slightly more inflationary environment as well. We're building great differentiation with Halo 3+ and EE network with its partners. We do see the restrictions opening up for retail, pubs and clubs, roaming coming back. We've got a much better service platform in terms of churn NPS, trading performance and a healthier base to build from, so confident about the future. A few headwinds during the next few months but once we're through Q4, I think we're in a much better place and a more sustainable base to build from.
And your next question comes from David Wright from Bank of America.
Sorry about that, Philip, yes, sir. I'm here just as ever struggling with mute. Actually, a lot of my question was just answered very interestingly on Consumer and the outlook for Consumer that is impacted by very high exposure to handsets. I guess -- does that mean, as we see this wider shift towards digitalization of the industry and maybe a reduced retail store footprint with more online sales supporting reduced commissions and better margins. But are you guys perhaps a little hampered in that process? If you're more reliant on the handsets, are you perhaps less able to moderate the retail store footprint? Or is there a way you can still try and shift more of your sales to online? And I would maybe be interested if you could give the current percentage of sales you currently manage online within retail mobile.
David, I'll get Marc just to answer most of that. But again, I'll just give you one quick point is it's all about getting the balance right. And the retail stores for us are actually a very, very important asset and will always optimize it, but I'll let Marc just give you the specifics. But unfortunately, we can't give you the breakdown. But go on, Marc.
Yes. Thanks, Philip. Yes, I think that's right. It's all about the balance. And the stores we know, and we saw this after the first lockdown opened up, there was a -- there's a huge demographic that do prefer shopping in retail than other channels, and the 55 years and over. And they're a very valuable part of the market. So we saw a massive sort of pent-up demand from that group coming back to buy not just handsets, but tablets and smart home accessories and broadband and TV, sport, all the other stuff we sell as well. So I still believe retail is going to be reasonably vibrant, I think, for the telco sector. The role of the stores, we've certainly seen an evolution in how our stores are performing. And in many cases, now we've been operating them -- and it's obviously been very lumpy with the lockdowns, but as almost micro hyperlocal contact centers. And there are a number of services that you can only really get still in a store. I mean when the world gets moving again and we're all sort of traveling in and out of offices, perhaps less frequently and handsets break down, 1/3 of customers every year break their handsets, smash their screens, an instant repair or same-day, next day repair is a vital service to keep you connected. As just one example, instant SIM swaps, all of these kind of things that a physical presence really helps you with, and the other part we're evolving to is effectively a store that comes to you through our home tech experts as well. So I consider those as much retail stores as physical retail stores in the sense that it is a mobile store that moves to our customers' homes or offices and gets them set up. So I think the role of retail, of course, it's going to evolve. We're pretty clear, I think we'll see less stores in the future. The role will certainly evolve. But they are really, really important for convergence, for bundling. Digital sales, I'm not going to give you the exact number, but massively up during the Christmas period. And we've got more and more digital capability rolling out that's making it easy for us, easier for us to cross-sell and serve our customers, and digital satisfaction on our brands is very high with a lot of investment going in there as well. So I don't see it as a disadvantage for us. It's -- these are market trends and customer trends we need to adjust to. But I'd much rather be adjusting to those trends and customer needs with a fantastic retail estate, home tech experts that are nationwide as well as a really strong digital channel, tele channel and a fantastic team nationwide. And that means we can adjust and support customers better than anybody else from our sector.
And David, one other thing, just I mean, as Marc says, we'll optimize it, it will evolve in terms of the retail estate. But it being closed, clearly gives an opportunity to see the value of it. And as Marc says, they've got a real role to play. They add a lot of value. And so as an example, Halo 3+, we're launching it now. I mean you can go into a store and walk out with it and be connected straight away. So I mean there are lots of other opportunities that -- of using the sort of micro service approach that are very local, hyperlocal activity that Marc talked about. So we're excited about it, but obviously, we'll also be very thoughtful about how it evolves over time. Thanks for that, David.
And your next question comes from Siyi He from Citi.
My question, just have a follow-up on the Consumer. Appreciate the color on the trends in Consumer going forward. I just want to ask on the cost side. EBITDA is down 13% this quarter, just because of the top line pressure. But I think that's potentially offset, to some extent, by COVID-related savings. And just now Enterprise, talk about the potential higher marketing spending on SMEs. So on Consumer as well, given that you're pushing for FTTP and 5G, should we anticipate more investment to come through post lockdowns? So overall, we think about Consumer is improvement in the topline trends and maybe less so on the EBITDA side because of higher cost. And also, if I may, just want to get your views about your 5G and how -- and maybe some comments on how do you see 5G tariffs being taken -- take-up and whether you think there could be opportunities to monetize this?
Great. I'll get Simon to just give you his perspective on your cost-type question. Very quickly on 5G. I mean, we're really excited about what we're doing on 5G. We always said we would maintain our market leadership that we had on 4G. And I think you can see the evidence here. The 5G rollout continues at at-pace. And there's encouraging demand. Obviously, the iPhone 12 launch from Apple is hugely important. And again, without showing loads of detail, I think we should feel very pleased with the outcome of that. And in market share terms, I think we performed very strongly. So I think there are lots of good indicators for 5G, and we are selling a combined package of 5G associated activities, which I think are helpful and positive. I'm hopeful, again, that the 5G market continues to have as much premium as we possibly can in the consumer market, but we'll see how the market plays out. We just need to be as competitive as we possibly can. But our propositions are the best in the marketplace. No question. And our coverage is better than anybody else. So that will keep happening. I think the big thing about 5G is Enterprise. I think -- and Rob and I have talked about this already. I think we're really excited about how we can use 5G in the Enterprise space to deliver things that people just can't get today. And the campus example that I used today at Warwick University is just a sort of taste of that. We've got some others as well. So we'll be bringing you back, Rob and I will bring back to you more examples out on 5G, but it's still early days, obviously, as we're building out the network. Simon, do you want to answer the cost-type question?
Yes, certainly. I mean, you are absolutely right, Siyi, that we are investing to drive differentiation and drive improved customer experience in Consumer as we are across the group. And we are also investing to drive take-up of ever better connectivity, both fixed and mobile, for which there's a significant receptivity amongst our customers. And as Marc described, we do see revenue momentum as we move forward through a combination of the strong base we built, the take-up of improved connectivity products and the pricing policy we're implementing. Yes, we will invest to drive that and we'll continue to do so. But we'll be able to mitigate some of that investment through continued delivery of our cost transformation program. And we've got significant continued opportunities to move more of our customer journeys to be straight through, to be fully digital. We've made huge strides in improving the productivity of our contact center operations, having brought them all back to the U.K. We are always challenging every element of the fixed cost base that sits across the group and is carried in Consumer. So all of those will give us leverage to continue to improve cost productivity.
And your next question comes from Carl Murdock-Smith from Berenberg.
I'd like to ask about the risk of industrial action by union members. I think the ballot results of a small number of Openreach engineers on strike action are actually due very shortly. How are talks going with the CWU more broadly? And should we be preparing ourselves for headlines of [ strike action in certain ] quarters?
Yes. Carl, thank you. Actually, I'm going to ask Alison Wilcox to make a comment on this and give you her perspective. I mean, the certain thing I'd say is we actually have a really constructive positive relationship with both our unions, actually. Many, many of our colleagues are members. And we encourage genuinely any dialogue with our staff through any channel. We set up this old colleagues Board, for example. So we've got lots of different channels by which we can communicate and hear from our colleagues. And the union is really, really important to that. So inevitably, we are -- we're transforming and modernizing and changing BT to make it a much better BT for the future. And when you have that level of change, inevitably it won't suit everybody's personal aspirations perfectly. It's just -- and one of the biggest things, Carl, that we're doing here is we're effectively moving from 300 locations in the U.K. to 30. Just think of the potential upheaval of that, and there are going to be people who are dislocated as a result of that and find their circumstances changing on them that doesn't meet their overall objectives. So it's never straightforward. The way we're approaching is to listen very, very carefully, hear people and in those circumstances where we can't meet people's objectives or aspirations or needs, treat with great care and handle things very professionally and very elegantly. And that's what Alison is leading on behalf of the whole company. Does it mean we agree everything? Of course, not. Is it possible that the Union get very disappointed in some of the implications for a very small number of people? Possibly. But again, the main message to you, Carl, is the changes we're making are to improve and modernize BT, make it much better. And under all circumstances, the vast, vast majority, and it's the high 90s percent of people are going to be better off as a result of what we do. So Alison, do you want to give your perspective on the specific question around the CWU?
Sure. Yes, of course. And Carl, nice to hear from you. I won't add to the context because Philip has captured that perfectly, actually. And in particular, the fact that we have long standing, very good and constructive relationships with unions that we work with. So we talk to them all the time. We walk every step of this road with them. And we consider that to be absolutely in our interest, but also in the interests of our people, too. So we're keeping very close to this. As you probably know, Carl, in December, so 10th of December, the CWU announced the result of a consultative ballot for industrial action. And they had a turnout of 74%, just over that, actually. And a yes vote of just about 98%. Now important to consider that, that was not a ballot for industrial action. It was a ballot asking their membership, whether they would be prepared to support that. And therefore, to some degree, that particular ballot was -- didn't indicate anything particularly concrete, but we do take the results of that very seriously because what it tells us is that we have a significant number of our people who are anxious, concerned and uncertain about the future, I think. So we do -- we're doubling down our efforts to make sure that both directly with our people, but also with the unions, that we continue to explain the case for change and as Philip says, that we take great care in doing that and also in reassuring people that we will go through every effort to try to reskill people whose jobs are at risk as much as we can. There's a smaller CWU ballot running at the moment, which is specifically for industrial action, that is associated with around about 170 repayment engineers in Openreach. So these are engineers who are moving or repairing the network for third parties. And the outcome of that is due to be announced around about lunch time today. It's possible that, that may result in industrial action during February. And we're standing by to understand what comes out of that. But our overall approach and strategy and commitment to working with the Trade unions as well as with our people is firm.
And your next question comes from Jerry Dellis from Jefferies.
Just coming back, I'm afraid to Ofcom and the fair bet and Melanie's statements, in particular on the 3rd of December. So Philip, earlier on, you said that really, what matters is the when and how of how Ofcom intends to regulate. And you'd like that to be written down in the final Ofcom statement. So I mean what Melanie said on the 3rd of December was that there should be some sort of premium for faster services and that the investment period might be a relatively long one, but she certainly didn't commit to a particular nominal figure. She didn't commit to a methodology for WACC calculation. And the timeframe for these Ofcom reviews is formally 5 years. So I realize that the question has been asked, but I wonder if you could just clarify what they could really spell out that would really address all of the concerns and meet all of the objectives that you stated earlier in terms of a visible timetable, that's a long one, and at least a clear methodology for cost of capital? And then linked to that, if you don't get what you consider to be an acceptable outcome. I mean, what happens there? You've talked about geographical fiber build a couple of times on this call. So would it be a situation of essentially easing off on the rural fiber build? And what would be the implication for your CapEx budget, please?
Yes. Jerry, thanks. I'll get Simon and Cathryn, just to chip in as well here. First, I think the speech that Dame Melanie made was actually very encouraging, right? And I think because she said a number of things there about recognizing the long-term nature, recognizing premium, as you so rightly say. And actually, she intimated and then indeed said that the focus isn't the returns we're making, which is encouraging. The focus is a fast build and a good customer outcome at good prices, good value for money. So I mean so that outcome-based approach is really, really good enough and we're hopeful that's going to see its way into the documentation and not more unhelpful things like blanket statements of as long as there's good competition, which is open to a whole host of misinterpretations or different points of view. So I think it's actually the intent and the sentiment in the speech is exactly what we wanted to hear. The question is -- and you were driving at it quite rightly is, what is written in the document that is specific enough to give us the reassurance? So an example, and Simon mentioned it is 2 charge controls is essential, 3 would be good. Because that recognizes the length of it. A clear terminology of how they would look at returns and how they would consider regulation in terms of calculations and numbers around WACC and other things would be extremely helpful. So I'll get Simon and Cathryn, just to comment on the specifics of what we'd like to see. But let me just give you an answer to your don't get question. I'm -- I think we will -- the regulatory framework that gets issued, I think, will absolutely underline our desire and our plan to build this package of 20 million homes. I think it does -- the profile of it and particularly around the yes, the rural build, but also the sequence of the rural versus urban build. But also, therefore, and also the pace of it is very dependent on the detail of the words. So it's not impossible that certain parts of the build could be very back-loaded. And since we're mid- to late 2020s, it wouldn't be in the country's interest to build some of the rural things right at the end. But if that was the sensible thing to do for our shareholders, given we've had 3 years to write this document and it then becomes cast in stone, that's what we might choose to do. So I hope -- and again, we don't know. We need to see it. But what I'm reassuring people is we'll be very, very thoughtful as a company as to where we put this money to work based on what we see from the regulator, ultimately, to a large degree, governs how we think about this fiber investment. Simon, do you want to add anything or, Cathryn, on the specifics of what we could hope for in terms of the document on around the fair bet?
Yes, Philip, why don't -- let me say what I think we would ideally need. And then if I may, Cathryn, perhaps from a regulatory perspective, talk about the various options. I mean, very specifically, we need clarity on the time period before which Ofcom would impose regulatory prices. As you know, we think 3 price control periods, which is broadly akin to the payback would be appropriate. And certainly 2 would be the minimum. Secondly, we need clarity on the method through which Ofcom would determine the WACC for this project at the point we make the investment decision. And ideally, we'd like to see that translated into a clear number but that clarity on the method such that all investors can then impute what the number would likely be. And then thirdly, clarity on the threshold over that cost of capital before which the regulator would intervene, such that we can keep upside to compensate the downside. And then finally, clarity on the method through which Ofcom would calculate the depreciation of that investment for the purposes of fixing -- of setting regulatory prices, and we think that needs to be some form of economic depreciation. So those are the 4 specific things. Cathryn, do you want to just address the different regulatory tools that could be done to bring that clarity?
Yes, happy to do that, Simon. Yes. I mean, there are different things that can be done here. We've talked about them, I think, already. Very, very helpful, I think, for Ofcom to be clear about the principles behind all of that. We would like them, we're very keen for them and I think they understand this, to set out their methodological approach in the document. The formulae that they would use, the risks that they would take into account, in particular, on WACC and the calculation of the premium. But we think that is possible. It's not unduly tying their hands in future, and it wouldn't only give helpful clarity and predictability to us, but also crucially, I think, to other fiber investors, and I think that matters to them. Similarly, in terms of clarity on their approach to depreciation, I think absolutely, Ofcom can give clarity on this. And in fact, if you look back at some previous Ofcom approaches to depreciation in charge controls, you'll see, for example, that they've used an annuity approach to depreciation. That might well be appropriate here because it would have the effect of, in a sense, matching cost recovery profiles to the demand profile for the service. That's not unreasonable. That would give us some assurance, for example, that when regulation kicks in, we will be able to recover the costs that were still outstanding for recovery at that point, given that perhaps demand had taken a little bit of time to ramp up for the service. And I think all of that is perfectly doable. It's the kind of thing that Ofcom has done in the past. We would like them to give clarity about the numbers. That would give us an extra degree of certainty going forward. But I think really the nonnegotiable here is clarity on the methodology. The only other thing I would say, which we haven't talked about so far is that, obviously our ability to earn a decent return on our fiber investment, is obviously partly about when Ofcom intervenes with further regulation of fiber pricing and how they might do that. But it's also about the freedom that Philip was talking about before for BP and in particular, Openreach to compete fairly in the market where, in fact, Ofcom isn't going to regulate, but where we face effective competition. So it's very important, I think, when we're thinking about our ability to earn a return, to think about those 2 halves, both the question about when and how Ofcom will regulate. But also the extent to which it gives us freedom to compete fairly in the market. And as Philip said, we are optimistic that the document will say something that we can live with but we will be watching that wording very carefully, indeed.
And your next question comes from James Ratzer from New Street Research.
Yes. Had a question going back to the topic of Openreach physical line connections, please, and the potential kind of threat from some of the fiber overbuilders. I mean looking at the numbers nationally, it seems as if -- so far, that's having a negligible effect on your business really. But just would love to hear a bit more about kind of what you're seeing at a regional level, say, in areas like maybe Coventry, Milton Keynes, Peterborough where CityFibre has been in the market for a bit longer or some of the suburbs in London where Hyperoptic has been present for longer. What kind of pressure, if any, are you seeing on your Openreach line connections in those areas?
Yes, sure, James. Look, Clive can give you his thoughts on that. Just again, just to repeat the point before, given our scale, we do expect over the next decade to see some line losses. But Clive and I and many others are focused on minimizing that number and keeping it as small as possible. So Clive, do you want to give your thoughts on the specifics around where we've gone with -- where we see other competition?
Yes, sure. Thanks very much for the question, James. Look, as alt nets and as Virgin Media extend their footprints, we will see some line losses, right? Whereas Virgin Media have a big footprint of their own to date, particularly their [ agency ] footprint. As ours so ramp up on our urban FTTP, I would expect for our share to grow, right? So things are going to be different in different areas. If even -- if you look at the Milton Keynes [ using ] the Coventry, there isn't a massive difference today in the rate of line losses, but this is all about figuring out what it's going to look like into the future. Now the one point I do want to ready speak with you now though, James, is an understanding that, right now, not all of the customers of our FTTP have digital voice available to their customers. So there is a slight fluttering in the numbers because sometimes when one of our CPs sort of touch [ the state ] of theirs on the FTTP, they maintain the WLR line in order to offer traditional PSTN voice. So there's some of that sort of hidden in the numbers, and that will unwind over time. Those numbers are not enormous, but it is something to just point out to you.
Thanks, Clive.
That's very helpful , Clive. It just may be worth adding that much of that are actually BT CPs. And therefore, from an overall group perspective, it's not a significant financial impact.
Yes, that's a good add. From the group perspective, it makes almost no difference at all, and that's an important point. Thank you, Simon.
And it also -- I mean it's a contributor to some of the margin pressure we described earlier on Consumer.
Yes. Correct.
And your next question comes from Adam Fox-Rumley from HSBC.
I'll try and make it good one. So I wondered if -- Philip, I wondered if you could give us an update on the process reengineering at BT? It was an area that you highlighted you wanted to address after your 100 days. And I wonder if the restructuring that was announced recently suggests that progress has been a bit slower than you had hoped there? Or whether it's just that different things need to happen now? And then relating to that slightly in the reorganization, I wondered if you needed to find a new Head of Corporate Strategy? It strikes me that Simon has got quite a lot of things on his plate already. And so I wondered if that was--if you needed that?
Yes. I mean, look Adam -- good questions, Adam. But I mean, first, on Simon, he's not that busy, particularly. So I think him taking on a bit more is well within his capability. And I'm saying it slightly tongue in cheek. But I mean, if there's somebody who --[ Clark ] -- Simon is an ex-McKinsey partner, by the way, I don't know if you knew that. So I'm very comfortable and confident that Simon and I can plot forward the BT Group strategy. So I'm very happy with that, by the way. So -- but on your other more substantive question, I think it's an important one. Actually, if you -- we're not sort of articulating the numbers on the pure cost savings from transformation and simplification. And -- but in the last quarter, we talked about GBP 352 million of run rate savings we had already achieved. And I think that indicates that we got off to a good start, and we'll be updating at our full-year results, the further numbers on that particular initiative. So I think I'm actually pleased with that. Where I'm less pleased with is -- it's just the nature of the beast, is the effort to modernize, reorganize, reengineer, restructure and make BT better. It's just very, very difficult. And as I've always said, it's going to take a fair few years to do that. We are making progress. But of course, I'd like to go faster. Everybody would like to go faster, but you just got to work your way through it. And there are steps that have to be taken around simplification of IT, both in terms of architecture, but applications and number of applications and also just dealing with processes, but there are little snippets of green shoots. The customer satisfaction numbers I referred to being basically higher than they've ever been across the company, with a few exceptions that we never speak of because we measure it on every single segment. It's down to a number of things. But there is a few examples where customer journeys and digital experiences and zero touch and new applications are generating better customer outcomes, which is the whole point. And internally, we're doing things that are making life easier by using technology. I mean, financial systems and support, for example, we're having a massive upgrade and change there. So I don't want to get this wrong, but it's really, really important. I don't want people to feel like we're not achieving what I want. It's just we're not going as fast as anyone would like. So again, having said that, as Harmeen arrives, it just adds a level of capability and skills and experience and allows us to learn from other places. And Harmeen has worked in the banking sector, which is a massive challenge away from legacy. She worked in travel, which is massive, e-commerce online. And obviously, she knows the telecoms market and spent the last 7 years at Bharti Airtel, in a market that's very mobile driven. I don't mean mobile device or handset. I mean, just the whole thinking is mobile app, digital. So I think we add that to our brilliant credentials that we already have. In Howard's team, as an example, where we are we know what we're doing on the network side, but we've got a complicated estate to sort out from the IT and digital side. So the combination of, frankly, Howard and Harmeen plus, hopefully, with a little bit of help from me and other members of the executive team working really closely together, augurs well for that, but it's a long journey. And I just want to be realistic about it. This is going to take us at least 5 years to get to the point where we start to feel like we're in a really, really good place. So it's a long old haul. But we're making okay progress. I think we're on to our last question, I believe. Is that right?
You are, yes, and it's from Polo Tang from UBS.
I joined the call late. Apologies if you've answered part of this question already. My question was really around competition from Sky. Because they seem to be getting more aggressive in terms of the mobile market, and they're also going to start targeting the SME broadband market. So can you maybe just talk through what you're seeing in terms of competitive dynamics in the consumer space and how you think about the impact on the SME market from Sky?
Yes. I mean, Polo, good point. I think, I mean, in general, I think everybody knows it's extremely competitive, right? And so wherever you look, whether in fiber build or even 5G, for example, there are multiple players spending a lot of money competing in this market. And I guess there are a lot of very powerful, very good companies, and the market is changing in some of the consolidation moves we've seen. So our expectation is that, that this competition is going to continue, which is why we need to make sure we're fit for the fight. And that fitness is about the point that Adam was asking about modernizing and reengineering and reorganizing and making BT a better company. But it's also more importantly, on that top of that platform of new BT, delivering customer propositions and services and an experience which are second to none. And the reason I answered the question with that sort of intro is the BT sort of service proposition and product development is beginning to show some real traction. And we've got to work out where we can differentiate. And you'll have noticed -- you can probably tell, I know you can. You can tell that the consumer metrics apart from the ARPU, which -- and the mobile roaming and the impact on BT Sport, from a customer base point of view are positive. And so Marc's team are doing a great job of competing really effectively. And there's a lot of only BT. Only BT can offer you complete WiFi with a WiFi guarantee in every room. Only BT can offer you Halo 3+, which is a product you can buy today and connect today and guarantees your connection. It's a U.K. first. So expect more of those things because of what you said. Sky and Vodafone and TalkTalk and Virgin and O2, they're all coming into the marketplace with new ideas and new thoughts. And you mentioned the mobile point for Sky and they're far in to SME, we fully expect those things. But as long as there's a level playing field and the regulatory framework isn't skewed against BT, BT's assets are really, really strong. We've got the best fixed network. We've got the best mobile network. By definition, that gives us the opportunity for the best converged network, à la Halo 3+ and the things that are going to appear in the SME market by definition, following that as Rob gets his arms around the business. Says that we've got superb assets, and we've got 100,000 people who have demonstrated they can deliver fantastic stuff for customers in the way I described. So we're ready for that competitive battle. We are not complacent, and we are well aware of other people doing very good things. But I'm confident over the next few years, we'll do better than that. And I think you'll see us offering really, really strong propositions into the marketplace that differentiate us and allow us to make a decent return and get up to that GBP 7.9 billion EBITDA that I talked about in 2023. So Polo, with that, I think we -- thank you for that question. I really appreciate it. I think we're going to close the call, Mark.
Yes, Philip, thank you very much for everyone's time. And if you've got any follow-up, please let me or any of the team know. Thank you very much.
Thank you, Philip. Thank you, Mark. Everyone, that does conclude your conference call for today. You may now disconnect. Thank you for joining. Enjoy the rest of your day.