BT Group plc (NYSE:BT) Q3 2022 Earnings Conference Call November 3, 2022 6:00 AM ET
Company Participants
Mark Lidiard – IR
Philip Jansen – Chief Executive
Simon Lowth – CFO
Conference Call Participants
Akhil Dattani – JPMorgan
Andrew Lee – Goldman Sachs
Nick Delfas – Redburn
Carl Murdock Smith – Berenberg
David Wright – Bank of America
Sam McHugh – Exane BNP
James Ratzer – New Street Research
Maurice Patrick – Barclays
John Karidis – Numis
Georgios Ierodiaconou – Citi
Nick Lyall – Societe Generale
Robert Grindle – Deutsche Bank
Adam Fox-Rumley – HSBC
Andrew Beale – Arete
Jakob Bluestone – Credit Suisse
Polo Tang – UBS
Stan Noel – Bernstein
Operator
Good day and welcome to BT’s First Half Results Call for the half year ended on the 30th of September 2022. My name is Ben, and I am your host today. During the presentation, your lines will remain on listen-only. [Operator Instructions]
I would like to hand over to Mark Lidiard. Mark, please go-ahead.
Mark Lidiard
Thanks, Ben, and welcome everyone. Presenting on today’s call is Philip Jansen, Chief Executive, and after the presentation, Simon Lowth, Chief Financial Officer will join Philip to answer your questions. We’d like to ask that you keep it to one question per person to accommodate as many people as possible.
Before we start, I’d like to draw your attention to the usual forward-looking statements in our press release and our latest annual report for examples of the factors that could cause actual results to differ from any forward-looking statements we may make. Both the press release and the annual report can be found on our website.
With that, I’d now like to hand over to Philip.
Philip Jansen
Thanks Mark. Good morning, everybody. And thanks for joining today’s call. Before I get into the detail of today’s results, I just wanted to sort of step-back and, give you an overview of progress this quarter and how we’re tracking against our long-term ambition.
First, despite some of the unimaginable circumstances we have faced. We have delivered a strong quarter two financial and operational performance and we are reiterating our commitment to delivering at least GBP7.9 billion of EBITDA this year.
Second our investment strategy is working. We are strengthening our competitive position and accelerating progress through improving our products propositions on service whilst investing heavily in our digitalization and next-generation networks.
In addition, to help offset current macroeconomic conditions, we are increasing our focus on costs and now, today announcing a GBP500 million increase to our fiscal year 25 cost-savings target. Further and very importantly our GBP15 billion investment in FTTP is delivering ahead of expectations on all fronts.
More on this later, but this is much more than just the built. Fourth, we are increasing CapEx this year, but this is good CapEx as is focused on FTTP connections and we are paying for this through reinvesting a tax refund received last month. The result is we are holding our cash outflow outlook for this year.
And finally, despite all of today’s market volatility, we are reaffirming our long-term ambition and continue to expect at least GBP1.5 billion more normalized free-cash flow year by the end of the decade following the peak of our full fiber investment. This cash uplift is before any contribution from revenue growth or cost-savings and underpin our progressive dividend policy.
What I am reiterating today is that we have the right strategy. We have a solid plan. We are executing against our plan. And we are on-track to deliver our long-term ambition supporting our customers underpinning economic growth in the UK and delivering for our shareholders.
Now moving on to our quarter two results on Slide 5, which I’ll talk to on a pro-forma basis. So, assuming the Sports JV has been in-place last year. We delivered another quarter of strong financial and operational performance, revenue was up 1% with penetrating in Consumer and Openreach, offset by the migration offset by the migration of wholesale MVNO customer the legacy product declines and continued pressure on large corporate customers in Enterprise and lower kit sales in Global. EBITDA was up 4% reflecting the revenue flow-through coupled with strong cost-control and one-off items that more than offset the impact of energy and other cost inflation.
Quarter two CapEx excluding Spectrum rose 29% to GBP1.4 billion, mainly reflecting higher fiber build and connections and the impact of inflation. Quarter two normalized free-cash flow was down 33% at GBP269 million primarily due to the increase in CapEx, partly offset by the increased EBITDA, stronger collections and the phasing sports rights payments.
With customers continue to embrace Openreach full fiber and the take-up ahead of our plan, we now expect a greater proportion of fiber connections in the early years of our investment program. This is very good news, but it brings forward provisioning spend on top of already higher inflation.
Separately, we’re receiving tax refund of around GBP200 million in October and I have decided to reinvest this back into our fiber build, meaning that we are raising our CapEx outlook for this year to around GBP5 billion. The tax refund will allow us to absorb this higher CapEx within our GBP1.3 billion to GBP1.5 billion.
Normalized free-cash flow guidance though will likely – though we will likely outturn towards the lower end of the range. We are more focused than ever on CapEx discipline, particularly legacy CapEx and we expect CapEx beyond fiscal year ’23 to stay at GBP4.8 billion for the remainder of the peak fiber build, which will complete in December 2026
Finally, and as expected we are announcing our interim dividend of 2.31 pence per share in line with our policy good to be set at 30% of prior year’s full-year dividends.
Moving now to our operating performance on Slide 6. Despite higher inflation, rising energy costs and macroeconomic uncertainty, we continue to build a critical network infrastructure that will underpin economic growth and productivity in the UK for many years to come.
We continue to connect more customers through these best-in-class next-generation networks whilst at the same time uplifting customer experience. Our full fiber network today reaches 9 million homes and businesses. And we have accelerated to an annualized build rate of GBP3.2 million premises in quarter two.
Beyond that, we’ve already laid down some of the infrastructure that underpins the next 6 million premises. Meaning the build is either complete or underway for around 15 million premises, that’s around half of the UK. Our average build cost remains within our range of GBP250 to GBP350 per premise. We’ve also seen strong demand with the fiber connection rate accelerating ahead of the build.
At the end of quarter two, connections were at 27% of the total build. Of course, we are determined to remain the part of choice to CPs in a competitive marketplace and our advance discussions to sharpen our FTTP pricing to further strengthen our relationships, attract new customers and facilitate even faster migration.
At the same time, as this unprecedented phase of fiber delivery, we’ve made fantastic progress upgrading the nations’ model connectivity. I have now deployed 5G in nearly all major towns and cities across the UK. As you know we are also investing to transform and digitize our systems processes and products to improve the customers experienced and low our cost base through an organization program and tight cost control.
We see the cost base continue to come down. I have already delivered GBP1.7 billion of annualized cost savings since launching the program in May of 2020 whilst of course we’re pleased with our performance to date given current market conditions it’s important that we go even further.
We are, therefore, announcing plans to expand our existing program to deliver an additional 500 million of savings by fiscal year ’25 bringing out total target to GBP3 billion of growth annualized cost savings.
To deliver this, we will implement further product – process systems of organization simplification along with procurement and supply chain improvements. This will increase the cost to achieve to GBP1.6 billion up from the GBP1.3 billion previously communicated.
Our accelerated delivering significant network and systems investment and relentless focus on our cost base all culminate in a strengthening of our competitive position this will result in continued network leadership through our best-in-class FTTP and 5G networks more customers on our next-generation platform at an ever-accelerating rate and a lower cost base with a simpler modernized operating model. This will put us in a really strong competitive position with a strong balance sheet and strong cash flow. And I wanted to take a few moments to update you on the progress against our five strategic priorities.
So, turning to Slide 7. In Consumer, we remain well positioned to continue driving growth delivering another strong quarter with pro forma revenue growth of 3%, pro forma EBITDA grew ahead of revenue and was up 16% supported by tight cost management and one-offs.
We’re encouraged by these financials and that our customer satisfaction metrics and leading indicators remain strong. Customer NPS is near record highs, churn remains low and complaints are still trending below the industry average. This excellent performance results from decisions and actions that have been taken over the last few years such as our relentless focus on customer experience, including onshoring our customer contact centers
Our market fairness agenda that have seen customers upgraded to fiber with no price or contract change and a significant reduction in our back book pricing differential and our annual contractual pricing policy, which provides greater transparency for our customers. We’ve added more customers to our next-generation platforms and quarter two than any other quarter with 121,500 net adds, and 308,000 new 5G connections
We committed to introducing new products and service to evolve our offering to customers with recent launches of E-security powered by Verisure Northern a new gaming bundle in a drive to become the UK’s number one network for gaming. Now, high quality connectivity has never been more important for our customers and our products provide great value for money.
However, we do recognize the pressure on the UK consumer, it’s important to us that those customers that need support in the current economic climate, do not get left behind and continue to have access to a decent broadband and mobile.
That’s why we’ve led the way and have by far and away the most customers on social tariffs as referenced recently by Ofcom. We are committed to even greater awareness of our social tariffs and we’re launching a mobile, social tariff ensuring those who are eligible can remain connected on the move.
Moving on to our second priority on Slide 8 to capitalize on our unrivaled assets in Enterprise and Global. And starting with our SME and SOHO business, we are pleased to see another quarter of revenue and EBITDA growth. Our public sector business is stable with BT remaining a key partner across many areas of governments and the countries public services. Our security business has grown 10% year-on-year in quarter two and we’ll maximize our leadership position here to continue growing this business ahead of the market.
Our wholesale business is annualizing the end of an MVNO contract and is focused on accelerating the move to all IP and expanding and based center and backhaul solutions for communication providers and other telcos. While the annualization of this MVNO contract puts pressure on growth in Enterprise, we have seen a sequential improvement in both revenue and EBITDA from quarter one to quarter two.
And while we continue to see pressure on our larger corporates and multinational customers, we are responding by pivoting harder to win new business and so we’re pleased to announce important new contracts including with Sellafield Enterprise and QBE Insurance in global. We are seeing ongoing declines in our legacy portfolio. Of course, but have been encouraged that the growth portfolio in Global is performing well ahead of the market.
Now turning to Openreach on Slide 9, which has continued to fire on all cylinders. Delivering yet another record quarter of FTTP build and connections. We passed over 800,000 premises in quarter two and we are the only national builder rolling out FTTB right across the UK with GBP2.8 million of our fiber footprint in rural areas.
We’ve delivered this whilst maintaining a premium build quality and our low GBP250 to 350 per premises build cost with ongoing build efficiencies and scale economics helping to offset the obvious inflationary pressures. We’re also really pleased to see that the fiber take-up has accelerated again in quarter two, despite a higher provisioning work stack resulting from industrial action.
The UK infrastructure market is changing quickly supply chains are stretched, the labor market is incredibly tight and financing costs are rising. We are not immune, but we are best positioned. Openreach scale and experience coupled with our commitment and balance sheet to fund the build. We’ve never been more certain that we will win the fiber race and deliver strong fair returns comfortably within our expected range.
However, as you all know, we are not complacent. We know others are building but only Openreach is connecting customers to full fiber at real scale driving ARPU up and driving cost down. Our Equinox pricing offer remains incredibly successful 90% of broadband orders in fiber areas and now for full fiber.
And over half of these are at ultrafast space. We want to go even faster to maximize returns on this network and are in advanced discussions with our communication provider customers to sharpen our pricing strengthen our partnerships and facilitate even faster migration of existing customers off copper and onto FTTP. In addition, Sky is continuing to ramp up, the numbers engineers performing fiber provisions on the Openreach network at a greater scale than we originally envisaged.
Now looking at the key part of this chart at top right on Slide 9, we are very encouraged by our broadband mix which together with CPI indexation underpins revenue growth in Openreach over the medium term under all scenarios. We outlined last November and the Openreach business briefing, our expectation that the broadband market growth would offset competitor churn.
Looking at the bottom of the chart, we saw strong broadband net adds during the pandemic. This did pull forward demand and has resulted in the current lower market growth. No longer offsetting the expected level of competitor churn. We consequently saw 89,000 mainly copper broadband line losses in quarter two, this did include around 40,000-line losses from a higher provisioning works that stemming from four days of industrial action. We expect the broadband line loss trend to continue for the rest of the year.
Turning to Slide 10, we’ve moved incredibly fast, and our fourth priority is to digitize automate and reskill to transform our cost base and improve productivity. I mentioned earlier that we’re focusing ever harder on our cost base and have delivered GBP1.7 billion of annualized gross cost savings since May 2020. We achieved this with the cost to deliver of GBP900 million. This is really strong progress.
But in the context of the current macroeconomic environment, higher energy prices and our unprecedented level of network investment is crucial we go even further. And as I mentioned, we therefore expanding our target by a further GBP500 million to GBP3 billion of gross annualized cost savings by fiscal year ’25 to be delivered through further system process and product simplification organization simplification and additional procurement savings.
Our confidence in this upgraded target is underpinned by a strong delivery in H1 with recent proof points, including the rationalization of our HR system landscape, reducing the number of suppliers and savings on license fees. The announced closure of over 200 buildings in the UK under our Better Workplace program and a 14% reduction in Global overseas building lease costs through a program of site closures and optimization. Work in our digital division is delivering genuine business transformation.
One fantastic example is our Sweeper app, which is underpinned by our recent deal with Google this app allows Openreach engineers to identify an input real time on a mobile device additional house industry that are commercially viable for the FTTP build. This allows us to connect more homes to full fiber faster as also obviously keeping cost down.
This has been active nationally since July and ready contributed to 4,000 premises to the quarter two build. Our digital journeys are proving increasingly popular with our customers with a number of upgrading to FTTP through our digital channels, tripling in just one year. We’ve also launched our new EE app our digital capability and engagement with the monthly average usage of the app, up 24% since launched.
In networks, another example we’ve now migrated millions of customers onto our converged core. The first of its kind in the UK, and we are making efficient use of our spectrum and have already started reforming 3G spectrum into our 4G and 5G network cementing our network leadership position.
And finally on Slide 11 and making sure we optimize our capital allocation and business portfolio. We have completed Sports joint venture with Warner Brothers discovery in a very attractive partnership that will improve our sports proposition for consumers, reduce our exposure to sports rights auctions and gives us greater strategic optionality over the medium term.
On the capital side, we are pleased that the BT pension scheme funding deficit remained stable at GBP4.4 billion as at June 2022 and the BT pension scheme have managed well through the recent period of gilt market volatility with no worsening of this funding position since June. We’re also pleased to see the IAS 19 deficit remains relatively low at GBP1.7 billion as at the end of September.
So, to conclude on Slide 12, we are accelerating our growth strategy. We’re investing heavily in our next generation networks and lowering our cost base by a further GBP500 million leading to a strengthening of our competitive position. We are operating in difficult economic circumstances of course, but we have a robust strategy a strong plan that we’re executing well, and we are reiterating our long-term growth ambition. CapEx is higher than we had forecast this year at GBP5 billion but this is good CapEx due to higher provisioning and we expect to retain CapEx at GBP4.8 billion for the rest of the peak fiber build.
As we exercise ever stricter discipline on legacy spend. Beyond the peak fiber build, we continue to expect at least a GBP1 reduction in CapEx flowing through to normalized free cash flow with an additional GBP0.5 billion uplift by the end of the decade as we benefit from an all IP, all FTTB network. This is a clear route to more than double our fiscal year ’22 normalized free cash flow before the benefits of revenue and EBITDA growth. All of this combines to underpin our progressive dividend policy with the interim dividend of GBP2.31pence per share confirm today.
And with that, I’d now like to open up to questions. So as usual can I please ask you to stick to one question. Operator, please could we have the first question.
Question-and-Answer Session
Operator
Certainly, thank you. [Operator Instructions] Our first question comes from Akhil Dattani from JPMorgan. Akhil, please go ahead.
Akhil Dattani
Can we start with a question on pricing, Pete, and it’s got two parts to it. I hope this is quite quick. So, the first is, if we look at Q2 numbers, it looks like the broadband growth has slowed a bit. It has the broadband ARPU growth in the churn has ticked up a little bit. I mean the whole growth with little changes, but I guess would be useful to get some understanding in color on your confidence. And sort of what you’re seeing around the price is sticking or if there’s any sort of sign of churn or discounting.
And I guess the bigger picture part of the question is that I’m sure you’ve seen commenting Ofcom where they said that whilst pricing is not regulated in UK, they would like telco operators to scrap their annual CPI price increases by April so, they’re just keen to understand your response to that and what your likely intentions are? Thanks.
Philip Jansen
Sure, Akhil. Pre-topic for this year, everybody knows the pricing changes that were made in April 2022 yes, that was announced to our customers a long time in advance is totally transparent and that whole program has gone extremely well.
So you know, there’s the – the consumer business in terms of its customer base is nicely in equilibrium it is balanced, and Net Promoter Score is good, the churn is low, customer scores low, the value for money scores continue to be good. So that’s this year, so there is no challenge at all to the balance of what we measured on the consumer side. As we look forward, now, we are going to be putting our prices up by CPI plus 3.9% next year.
And the reason for that is very, very simple really, which is now, we are experiencing significant inflation. The whole business is under pressure, like every other company and every other household so, energy costs up significantly, but it’s across the board, right. So, we have to put in CPI, but equally, we’ve got to fund this huge investment. You have noticed today the CapEx is significantly increased, okay that’s partly due to inflation.
There are other things in their excess provisioning, the stuff about the GBP6 million additional sort of pipeline of FTTP, so these inflationary pressures we are seeing. We’re also investing heavily in the future. So that’s 3.9 above CPI is funding that investment, which ultimately is it’s a fantastic customer experiences in FTTP. You can see in the ARPU, right. So, our customers are happy paying higher prices for FTTP and we are still great value for money and that occurred is the most important point.
The thing that we measure so carefully is the value for money, of our core proposition. No one likes seeing prices go up unfortunately, in this environment, it just have to go up because otherwise, we can’t balance the books and fund the investment. So, and the most important thing is, as I say again is, when you look at what we offer for about – about a pound a day, you can get exceptional connectivity both the fixed and the mobile.
Operator
Our second question comes from Andrew Lee from Goldman Sachs. Andrew, please proceed.
Andrew Lee
Good morning. I had a question. I guess the other side of the question to act of question so, you’ve answered really helpfully on the consumer pricing power and stickiness. I guess all investor pushback today on your results revolves around spend on new fiber but questions around the monetization. So, I wanted to just ask on the wholesale side of things. The question really is simply is all net pressure rising and/or your broadband pricing power outlook faltering because investors see is obviously your comments around sharpening the pencil on Openreach wholesale fiber pricing get that can accelerate migration, but is there another side to it which is that you’re seeing more network competitive pressure, and investors are also seeing that acceleration of the line loss let’s say you Openreach broadband line loss to 49,000 as you, as you mentioned in your, in your release. So, how do you reassure investors that the balance between price and volume is still heading in the right direction and network competitive pressure is not actually rising?
Philip Jansen
Yes, Andrew. Great question, I mean the short answer is, do we see increased network pressure? No. What we see is a situation where we have never felt more confident about our FTTP investment genuinely, honestly, and the reason for that is yes, the build though is going extremely well GBP9 million. We’ve also got in the pipeline another 6, we can see those GBP6 million. We know where they are, exactly. We’ve already started building some of that infrastructure.
The connection rate at 27% and that’s the most important number to stare at. At such an early stage in the build, we’ve got 27% connected to FTTP under the stats on selling FTTP and fiber only areas are amazing. So, the reason I say in terms of the network pressure, it’s all about customers now. It’s not about the build anymore.
We’re going to finish the build, it’s all about connecting customers and that’s the most important thing. So, what we want to do, the Equinox 2 change is to help migrate as quickly as possible to get us off copper and get us onto fiber as quick as possible, because the, the answer to your last question, it’s all about the ARPU, right.
Look at the ARPU, the ARPU is up GBP1 year-on-year and 6.5% on average. So, we’re moving people of old stuff into much better technology at a higher price, where they are happier. So, it’s – we couldn’t be more confident about the FTTP program, and we’re delighted with the progress being made in Openreach. But look to see us go even further and that’s why we think it’s a very sensible decision to spend GBP5 billion this year, which is more than we had originally thought.
Operator
Our next question comes from Nick Delfas from Redburn. Nick, please go ahead.
Nick Delfas
So just coming back to this issue of GBP7.9 billion, obviously, you’ve made some good progress in the first half of the year. But there are also quite a lot of one-offs. So, there’s a one-off I think in consumer, there’s one off in enterprise, you deconsolidated BT Sport that might save you GBP40 million. Could you just give us a quick roundup of roughly the size of those and also for any negative offsetting ones? I mean, looking at it from a very high level basis, maybe there’s a GBP100 million of extra stuff contributing to the GBP7.9 billion, but just some sizing. Thanks very much.
Philip Jansen
I mean, let me just say a couple things. I think you just step back. I’m really encouraged by where we are today. January to, to know two years after talking about 7.9 in an economic world, which is fraught with challenge and uncertainty, we’re growing revenue, growing EBITDA for the half year, in line with what we thought we would be doing.
We are reaffirming our outlook at GBP7.9 billion despite obvious pressures that everybody knows about. And I talked about it we’ll deliver that under any imaginable circumstance will allow the things I didn’t think of. I didn’t think there’ll be a war.
I didn’t think energy prices to deal with what I did. I didn’t think inflation would be double digits. I didn’t think interest rates would go up as they are. So, as long as the things that we have as company has dealt with, and I think we’ve done a really, really well to say that we’re still on 7.9 and I’m delighted about it and the teams should take great credit.
I mean, my leadership team to deliver that GBP7.9 billion in the year will be a great achievement. And yes, there are lots of moving parts there. Let me just give you a couple of other thoughts. That’s a GBP300 million improvement if we do it versus last year. You know, we’ve taken an energy hit of over GBP200 million this year compared to last, our MVNO is about GBP100 million. That’s a GBP600 million swing right there, improvement and I’ve answered pretty good results.
So yes, cost has ups and downs in it and any business like this has one-offs. They’re not really one-offs actually. Let Simon, give you a sense of them, but they are just things that are individual items that for good order. We set out for ourselves and we understand it. So, Simon would you have any there?
Simon Lowth
No, I think that’s a key point. I mean, the underlying business performance those improved by over GBP600 million as you just said. We have rightly called out there being some non-recurring items in H1, I mean it’s sort of mid to high teens. This is the – these are not unusual for a business of our size and scale, and they completely dwarfed by the underlying improvement.
What are they? I mean, there’s some movement in rebates on trading between last year and this year, why, because we actually traded better than we had anticipated in the year, and we did have a VAT settlement small, small number.
And in addition to that, yes, there is a modest contribution from wet. But that’s been vastly overplayed remember that from the BT Sport because the business was improving in the course of this year. There is only six months of it. So, that’s really in the noise timing. We feel very confident on it at least GBP7.9 billion. Hope that helps you, Nick.
Operator
The following question comes from Carl Murdock Smith from Berenberg. Carl, you may proceed.
Carl Murdock Smith
Is that mix today. So, in 2020 BT moved its management share options away from incentive share plans to restrictive share plans creating a lot more certainty around the size of the buybacks that you will have to execute to offset the dilutive impact of these options. Last year, you bought back GBP184 million of shares. In H1, you’ve bought back GBP138 million. In large part, leading to the net debt missed day versus consensus. And yet when I look at consensus, it only forecast about GBP40 million a year going forward, which I view as materially wrong. I wanted to ask if you could provide some guidance on this line going forward and whether you would agree or disagree with my view that consensus is currently wrong by GBP100 million or even more each year on this cost line. Thank you.
Simon Lowth
Well, I think consensus appears to be wrong in the prospects for the business. And therefore, it might cost us to buy back some shares. But the core point, Carl is yes, we are undertaking as you know, we’ve repurchased shares to cover employee share schemes. I’m not going to give guidance for subsequent years on a total net debt 2019. It’s not a material number. Thanks
Operator
Our next question comes from David Wright from Bank of America. David, you may proceed.
David Wright
Thank you. Sorry about that guys it just took a while to go through on-meeting process. Just on the 40,000 lines you have flagged the broadband line loss is due to the strike action. I guess, if we just annualize that and potentially with some increase strike action that I think is even plan, then we could be talking like a sort of 200,000 broadband line loss impact. And I’m just kind of thinking about that all wrong and the only reason I just think about that is, you guys are still standing firm with your offer to employees. Right now, but this is really quite material disruption. I’m just wondering how you’re thinking that, about that, and what measures you can take to offset that risk or how even those discussions with the unions are going at all? Thank you very much.
Philip Jansen
Thanks, David. I mean, these 40,000 lines that missed appointments effectively as a result of the industrial action first, four days where we weren’t able to deliver on our customer commitments, which obviously is very disappointing.
We’ll make those up eventually, right and of course, you’re right, there may be a few cancellations they inevitably, but we are absolutely determined to make those up. So, of course, we hope that the industrial action doesn’t carry on by definition, and we’re working really, really hard to find a way forward where we get back to a more normalized situation within BT.
And I’d just say on the point with our CW partners and that really a pull partner, we’re always talking to them, and I’m really, really helpful we’ll find a way forward. But to be crystal clear, the pay that we described for April ’22 that matter is now closed.
So, we’re just moving forward, trying to look at what we do going forward for our people, and we want to do the right thing by peer of course and you will get the point which trying to balance all the different competing pressures on the business, deliver our commitments to the market, to our shareholders, to our pension holders, to our employees and to our customers. So, I’m pretty confident we’ll be in a good situation over the next few months. So, we got a lot of hard work to do.
Operator
The next question comes from Sam McHugh from Exane BNP. Sam, please go ahead.
Sam McHugh
Just on dividend at the time, you talked about tax working capital interest and leases in the region of GBP2 billion which consensus as at the moment but obviously a few things have changed whether it’s tax, the slight cash benefit of the EBITDA boost from a Sports JV inflation interest costs. Is this GBP2 billion below the line items for all that stuff, installed the right ballpark? And how are we thinking about the dividend coverage in light of that target and the below the line cash items? Thanks.
Simon Lowth
We, we missed – Sam, we missed the first part of your question. I think you were asking whether our expectation of normalized cash flow outside of CapEx remained at about GBP2 billion. I wasn’t – we didn’t hear whether you’re referring to this year or next year. Could you just clarify that for us, Sam so we can help and answer.
Sam McHugh
Okay. Yes, sorry. Yes, yes exactly that I was saying in the future if I look at consensus. And you had talked about this GBP2 billion roughly, in the medium term, that’s kind of a level of the cash items to explain the dividend coverage? So, is that GBP2 billion still the right number, pretty much?
Simon Lowth
Yes. It’s not – it has not changed, Sam but that’s, that is sort of in line. It’s a combination of leases which you’ve got pretty good visibility of it includes interest and tax. We will have a bit of a step-up in taxes as we always said next year, but equally, we, we’ve managed, and we got a lot of working capital improvement that’s flowing through. So no, we, we – but that’s good handle for that those items as we move forward.
Operator
The following question comes from Jerry Dellis from Jefferies. Jerry, please go ahead.
Philip Jansen
Hi, Jerry.
Simon Lowth
Jerry?
Operator
Jerry, could you please – if you’re not on mute.
We’ll move on to our next question, which is coming from James Ratzer. James, please go ahead.
James Ratzer
Do you guys hear me?
Philip Jansen
We can.
James Ratzer
Yes, good morning, Philip. Thank you. So, I was very intrigued by the comment you made earlier that you are going to go ahead with the CPI plus 3.9% increase next year and tie that to your costs growing, which presumably other costs that BT Consumer effectively faces of which one of those is obviously the payments to Openreach. Does this mean that with the Equinox 2 pricing that is being talked about, you are still going to be sticking with CPI increases on Equinox 2?
I’d just love to get a little bit more detail about how those might be structured. I was really wondering whether actually BT consumers costs wouldn’t be going up as much as CPI if a price cut is potentially being thought about at Openreach. Thank you.
Philip Jansen
Sure. I mean, I can’t go into details on Equinox 2, that’s a very important piece of work, which we are working with our CPIs and Ofcom. By definition, means that we are offering better value for money, right. And that changes in that which have some reductions by definition again versus what we’re currently doing on Equinox 1.
So, I guess the CPI plus 3.9, I tried to explain in my previous answer, it’s so important that you don’t just look at it as the price. It’s, it’s the whole business in equilibrium and our customers feel good about what they buy from us as we put our prices through.
So, I think you got to remember what we did a few years ago is we corrected some of the anomalies that we had in our consumer customer base. So, we spend enough from memory, it was like I know, GBP250 million, GBP300 million correcting some other places where our customers pretty well out of kilter with what was delivering great value for money.
So, as I said earlier, we monitor the Halo of that so, now that we are putting our prices up as we have done last year and this year. The reasons for it are all inflationary costs were experiencing across the whole business, by the way, it’s not just consumer, don’t look at it as consumer, they rely on a 5G network, they rely on our core network, they rely on all the network activity, they get all the benefits of IT and technology all our buildings.
And so, don’t look at it as just in isolation, the total business has inflationary cost pressures and is investing enormously for the future benefit all of us and therefore, the CPI is a reflection of inflation and the 3.9 is a reflection of the massive investment is going into benefit all customers and all stakeholders.
Operator
The following question comes from Maurice Patrick from Barclays. Maurice, please go ahead.
Philip Jansen
Hi, Maurice. We can’t hear you.
Maurice Patrick
Can you hear me, okay?
Simon Lowth
Yes, we can.
Maurice Patrick
Yes, great. So, you never know these days only two years into post COVID. So, a sort of a bigger sort of value versus volume question please, mainly for consumer but I guess it applies also to Openreach. Now, I recall a couple of years ago, you sort of overtly moved to protect your consumer base by effectively cutting price and sort of the back book. Saying you didn’t want to lose, lose customers signaling. And thinking today that you’re going to put through another CPI plus 3.9% increase next year maybe been run some risk of loss of market share going forward? So, I guess are we, are we going back to a value over volume approach for the next couple of years whilst you’re defending those cost increases? So, I guess the same question kind of applies to Openreach too?
Philip Jansen
Sure, answer is no. It’s too simple. But that’s overly simplistic way of looking at it. It’s right in the middle. So, we will make sure we’ve got the high market share of the customers that we won and when we, as you said, cut price for the back but we didn’t actually cut prices alone, we changed some of the propositions dramatically.
So, we added more products in. We provided Halo, which is the key thing. And we also sort of other things, the bundle and also certain cases reduced prices and move people from copper to fiber. There was a whole range of things that make sure each customer segment was getting great value for money that brought churn down, brought complaints down and increase NPS.
What we’re doing now is, yes, the – if you look at just price, of course prices are going up, you see in our numbers now and you can see the numbers going forward. But there are lots of things changing below that right and that’s all about delivering the right thing for each customer segment and price is just one part of that.
But the proposition is changing, too. So, under the banner of that price, people are getting more value and that’s what I’m trying to drive at. So, where we feel really good is that the BT Consumer and in Openreach for that matter, the NPS and the value for money scores, remains absolutely want them to be as do the churn, by the way. So, don’t think of it as a change in strategy of value versus volume of volume versus value, it’s all about getting the right balance and the moment that balance is working.
Operator
Moving to John Karidis from Numis. John, you may proceed.
John Karidis
Hello, can you hear me?
Philip Jansen
We can hear you now. You’re on mute, John. I can see you now in green.
John Karidis
Okay, great. Excellent, thanks. Okay, so, a year ago in a briefing to the city, Openreach put up a slide that said that on the worst-case scenario, Openreach would lose about 600,000 lines over seven years at the end of ’28. In the last two quarters, it’s lost 130,000 line so, could you help me sort of square the point that you made about network-based competition have a no impact on Openreach. And sort of related to this and maybe you’ll answer is going to bring value again, but I wonder whether that matters once we have – now that we have a sort – a cost of living crisis?
On the one hand, you’re cutting your wholesale prices so, a potentially choking off net infrastructure-based competition and on the other hand, you’re increasing retail prices. How do you sort of convince Ofcom that this is to the benefit of citizens going forward?
Philip Jansen
Okay, let me do the last one. And mostly, I’ve already sort of answered the first one. I think Simon you give your perspective on Openreach line losses over the, the pressure and will talk about the overall business case and what we assumed but Simon can do that for you. On the whole, I mean, let’s be clear, the wholesale prices of broadband through Openreach are going up.
So, they are index-linked to different degrees and there are some specific things around certain types of products basically, there has indexation and Openreach. And that’s not going to change and so that inflates the wholesale prices and then obviously, that’s part of the reason why that the customers of Openreach have to pass on those price increase. That’s a well-recognized dynamic that was agreed a long time ago.
So, you’re seeing overall indexation in wholesale and retail is going to happen, what I’m really saying to you is we’re absolutely committed to the CPI plus 3.9% as a mechanism for funding the investment that we also badly need to get to the new technology that we know people value. There’s no shortcut to delivering that and that’s what we’re going to do. So, I’m going to give you a point on, on the line losses.
Simon Lowth
Yes sure. And I think we’ve covered it, John. But we were pretty clear in the business briefing that we expected to see some very modest loss of broadband lines and we saw that as a function of loss of market share to competitors given that they are building. And secondly, that will be compensated for by a combination of homes coming new to broadband and secondly, new homes and we quantified that for you that time as I recall, it’s something like 300,000 and 400,000 a year. What has changed in the last sort of 6 to 9 months is we have seen slightly lower new home build, which is considerably a function of the macro situation.
And secondly as Philip described, we’ve seen fewer new homes broadband, which is now very apparent was due to a huge pull forward during the pandemic. So going forward, we would expect not in this year, but certainly over the next two or three years, we’d expect the rate of new home builds to pick up again to meet the sort of government targets and we would expect the large number of homes still not on broadband to come back into the market.
But it will happen over the next two or three years final but that’ll make so, I think Philip also may do remember that the real driver of revenue is the ARPU uplift. And the ARPU uplift by moving people to higher speed FTTP product is what gives us confidence in the revenue and the year-on-year increase in that dwarfs the very small reduction. I think is about 40 basis point reduction in the broadband lines.
And finally of course, moving onto and FTTP platform dramatically reduces our costs so that thesis for the Openreach business case remains absolutely intact.
Philip Jansen
And John, that is why I said at the beginning, we never felt more confident in our FTTP investment case and not just the investment case, the strategic advantage that gives BT that’s going to last for decades. So, in both sides is that the financials a bit like are no-brainer, right. So, we just accelerating and getting on with it. Customer connections 27%, higher ARPU, lower fault rate, lower costs, better service, high satisfaction, what’s there not to like apart from is expensive to get it done, but you only do once in a generation.
Operator
Up next is Georgios from Citi. Georgios, please go ahead.
Georgios Ierodiaconou
Got one question around the energy costs more in the medium term. And I just wanted to understand the options that you have around PPAs in the next few years in order to give ourselves and also give more clarity to the market around your long-term, energy need some cost if you could give us an indication of what’s the average price you are paying now versus what the PPAs can offer you? You could perhaps give us a breach over the next couple of years to have an understanding despite the volatility. What the end game could be in terms of cost?
And if it’s possible, our pillars for that, but I just wanted one clarification around your fiber CapEx because you mentioned with Equinox 2.0 that you expect faster connectivity and may increase on customers. So, I’m just curious, the GBP200 million reduction in CapEx next year while I’m guessing a lot of their connections will happen next year. Is it coming from other areas from efficiencies? I just wanted to maybe clarify that point. Thank you.
Philip Jansen
I mean, look, we can’t get into the individual details of our energy PPAs. I’ll say something that I’ve chip in obviously, extremely challenging energy, very important for us big number we’ve been transparent about how much extra we’re paying year-on-year, GBP200 million actually you give credit to Simon and his team, and we are on this daily with another member of the exact looking at it really, really catch up. So, we’ve done as good a job as anyone could have expected given the circumstances
And we’re very thoughtful about what we do going forward given the volatility. We don’t hook ourselves into a position then it looks a little bit uncomfortable in a year or so in time so getting the balance of hedging and spot market and PPAs getting that right with key partners is really important. Simon, Simon leads that effort.
But I would just reassure you, we’re not sure what data and info perspective on what to do. We think about it very carefully and we look at it over the time. Sam, do you want to add anything to that I mean, some sense of that how we think about PPAs and hedging and stuff?
Simon Lowth
Well, I mean, we’re not going to go into the details of demands and prices and so forth, but I think you’ve got information of that so we can piece this together. We told you our energy prices went up GBP200 million. We told you about 85%, 80% to 85% hedged, and that will allow you to figure out kind of what the – approximately what the current contracted prices.
What I can tell you going forward is that we’re about half hedged for next year already and those were hedges they’re actually put in place, early part of last year. So, they actually rather better than our hedged price up all in hedge price for ’23. That’s good. The other half, obviously, we do face market exposure. But we are seeing much more activity amongst PPA providers both physical and virtual. And we will manage the energy position as we have done this year and deliver on our EBITDA growth into next year.
Operator
The following question comes from Nick Lyall from Societe Generale. Nick, please proceed.
Nick Lyall
Hi, there, great. And it’s just a question on Enterprise please on the EBITDA when I take out the MVNO losses for the rest of the year, some of the one-offs, it still seems as if you need slowing declines in the underlying EBITDA and so in other words, an improvement in – of the SME or large corporate positions. So, could you just update us on how they’re both going? It doesn’t seem like assortment environment you want to be looking for an improvement in underlying trading? So, you can just maybe give us something in SME and large enterprise to give us –
Philip Jansen
Yes, I mean let me give you my explain then Simon can chip in. Look, I think as I’ve said in my earlier remarks the SOHO and SME areas are growing and we’re in good shape there. I mean there’s always more to do and we’ve got lots of work in the background and improving. So, I think it’s going to offer our customers in both those segments right. So, I think we’ve talked about that a few times before.
So, again that’s, that’s trajectory is reassuring is good, but there’s always more to do. I think you’re right to say it’s in the other part of the business, which we sort of called corporate public sector is a larger account, which includes some of the government contractors by definition lumpy and there are larger contracts managed service contracts in that.
So, we need a bit of a bounce back in the market, of course, there’s still a bit of a COVID hangover in terms of the amount of activity change controls, new developments, new ideas, it’s not quite there versus what we used to have. But again, Rob and the team were working really, really hard to pivot and re-rotate that business to be selling more of the newer higher growth things which you know about and move away from the legacy and it’s the same old challenges with which we’re working on.
Sam, do you want to add anything there.
Simon Lowth
No, I think, I mean the businesses. If you add Global and Enterprise together business was up sort of GBP30 million to GBP35 million Q2 and Q1. So, we’re saying momentum restored, as we said, we’re saying sound trading in the volume part of the business.
It is challenges in the large corporates, we’d be very clear about that. The teams in both businesses are doing a fabulous job in working with customers to build the pipeline, and you’ve seen that growth, heading Philip, it’s the cost transformation opportunity there. They’ve done a great job delivering on it and they will do more. It’s a tough market. The business is going to get back to growth over time.
Operator
Moving to Robert Grindle from Deutsche Bank. Robert, please go ahead.
Philip Jansen
Hi Robert. We can hear you loud and clear.
Robert Grindle
Perfect, thanks. A quick clarification on the strikes impact. Do you save wages on strike days or is that offset by penalties semester of it? And if you raise prices by CPI plus is it sustainable to argue for your sub-CPI wage increases? And I saw some trade press on giving resellers access to EE under the partner Plus scheme, is this a major thing, is the idea to offset MVNO losses via resellers?
Philip Jansen
Thanks. Simon, you did it last one quickly rise mix rather that’s down.
Simon Lowth
It’s a small thing immaterial in the scheme of – in the scheme of consumer BT.
Philip Jansen
Great. Again, on the strikes impact. I mean best way to describe it is we’re desperately sad that our staff have gone out and take the industrial action on strike, it’s not good for anybody, it’s not good for the combination, not good for our customers, not good for our people, it’s not good for the union.
So, it’s a sad situation, which we’re very disappointed on and we’re working really hard to get some way forward out of that. From a financial point of view, the impact is modest, right it hasn’t really hit us from a financial point of view, but I am not – I prefer it somewhere the financial was bigger than the morale wasn’t so bad.
So, I’m being honest with you. It’s very tough inside the company when you’ve got that kind of industrial action, so financially not that group, not that big, because we’ve managed and mitigated it really, really well. And therefore, whether it be answering 999 calls, handle perfectly all the way through its to delivering for our customers across the board, but there are some impacts and the one that we will be transparent about is these 40,000 deferrals in Openreach, which we haven’t got to because our people were there on the day to connect our customers. So, we’ll make it up. We’ve got very clear plans to make sure those people are contacted and put back in the works stat and of course, fuel will fall out. So, we’re doing everything we possibly can.
I mean, specifically people loose pay with it that’s why it’s so sad once if you go on strike, you don’t get paid and there’s limited way to make that up, right. So, it’s a real. That’s why I’m saying no one wins.
So, we’re really keen to find a way out of this, but the pay award that we made in April, which was, as I say, industry leading better than anybody else in our industry that matter is closed, but I’ll always talk and we will always talk to anybody about what we do in the future and we want to do right by our people and we want to help them as much as we possibly can, particularly the lower-paid deal with the cost of living crisis.
Again, I mean again just say you ask it, linking it to our CPI plus price increases. We are a business here, right. And we’re here to deliver commercial outcomes for all our different stakeholders and make sure that BT has a bright future and a stronger relative to its competition.
We are definitely doing that and I’m not pulling that risk for anything. And so, we can afford is, is to get the balance wrong. So that was price increased I’ve said before, our funding progress and investment and that investment is to the benefit of everybody, it’s making sure that for our customers. Things are better and therefore, also by definition that we can provide employment for our colleagues and the prospects both for customers and our colleagues are bright in the future and we don’t run around. So, that’s what we’re doing.
Operator
Up next is Adam Fox-Rumley from HSBC. Adam, please.
Adam Fox-Rumley
Thank you very much. So, the question about the new cost savings. Please, you gave us a few bullets in detail in the presentation, but I wanted to ask if those new plans or whether their longer-term plans that have been brought forward in the extent to which the kind of detail has been fleshed out there? And then on the subject of efficiencies. I just wondered if I could re-ask Georgios’ second question about delivering a step down in CapEx alongside a faster pace of FTTP connections and the balance there, please?
Philip Jansen
Yes, the short answer is on the new cost savings are in three buckets. So, you mentioned two of them. The first bucket, you didn’t mention is existing activity even harder new, yes. Anything that was in longer-term trying to bring it forward so, leaving no stone unturned to reduce unnecessary costs look for wastage, look for duplication, use technology to automate whatever can be automated to make it lower cost more efficient better for customers.
So, it’s the same stuff. It’s across organization, procurement systems, technology unless if you want everybody at BT looking at how we spend our money and treating it as their money. So it’s, it’s a doubling down. We’ve got a good track record. We know how to do. We do with the 1.7 now, it needs to be 3. We got to get cracking on that.
On the step down in CapEx look, no the, the decision to go to GBP5 billion this year it’s a really good decision, right. But the discipline is still there. We can afford it for the reasons that Simon and I have mentioned on the tax credit, the GBP4.8 billion is the right number. That doesn’t mean that’s an easy number by the way, right. So, we have to be very, very disciplined in how we spend our CapEx, but it’s a big number.
So, we will be continuing to drive fiber hard on build and on connections, but there’s lower copper CapEx needed, right. So, more discipline across every element on the CapEx just has to be exercised when you’re phasing into very challenging difficult economic circumstances. So at the end of the day, let’s not forget cost savings improved CapEx.
Operator
The following question comes from Andrew Beale from Arete. Andrew, please go ahead.
Andrew Beale
I’ve just got a question on cash flow impacts from the BT Sports Discovery JV. We, I guess, we can now see the financial obligations for the minimum guaranteed at GBP7.45 gross million gross of the tax credit of 106. And then on the other side of the equation. You’ve obviously got the deferred and contingent consideration, which I guess the largely offsetting. You’ve got a new revolver for working cap. You’ve got other working capital settlement.
But the agency pressed you are modest benefit on pro forma EBITDA going forward from the de-consolidation. I’m just wondering if you can set out which of these multiple effects might land in your normalized free cash flow and alongside that whether there are any ongoing net cash impacts outside that definition?
Simon Lowth
I mean the cutting through that as we move forward clearly, the minimum guarantee offset by the saving to revenues we generate from selling those rights flows through the normalized cash flow as will the distributions that we received from the JV, and so those would be the two impacts as we go forward. And you’ll see those as we go into the second half and into next year.
Philip Jansen
Thank you, Andrew.
Operator
The next question comes from Jakob Bluestone from Credit Suisse. Jacob, please go ahead.
Jakob Bluestone
Quick question regarding the cost savings, you mentioned in the press release – press presentation earlier today, you talked about reducing jobs in a controlled manner. I just had a question around your absolute head count levels there it went up this quarter or this half year so, it went from about 98,000 employees to 100,000. So, if you can maybe just give a little bit of color how come your head count is rising?
Philip Jansen
Thank you. Yes, good, good question, Jakob. Simon can just give you that.
Simon Lowth
Sure. I mean the headcount rose slightly in the half as you said, there are two things going on. Firstly, we continue to see a step-up in our build activity in Openreach. And we are favoring internal direct labor over subcon. So, there’s a switch essentially there from subcon into direct labor. But in addition to that, we’re also, as a matter of strategy, moving more of our external subcon in our digital environment in-house.
And so that’s also increasing our own employees but reducing subcon. Those are probably the two main factors that are at play and typically, we’re doing that because from a total labor cost perspective it leads to a cheaper better, more efficient outcome and more importantly and more effective delivery.
So that’s what’s driving the core, the direct labor being offset largely by even more significant reductions in subcon. And our plans to bring down and deliver the total labor cost gross savings very firmly on track.
Operator
Our next question comes from Polo Tang from UBS. You may proceed.
Polo Tang
Question about CPI indexation so, in Equinox 2, you mentioned that you intend to keep CPI indexation for Openreach wholesale pricing, but would there be a ceiling on this? Otherwise, does this does not risk communication providers transferring volumes onto competing all nets given that all net pricing does not necessarily have the same degree of CPI indexation?
But also on this topic, you’ve mentioned in your press ahead with CPI plus 3.9% increases in Consumer. Is this sustainable given that front book pricing does not seem to have increased? And operators like three UK of 4.5% absolute price increases built into contracts and also you have Sky and Virgin Media only having ad hoc increases therefore, is there a risk that other operators, but through much lower increases to take share from BT Consumer? Thanks.
Philip Jansen
Sure, I’ll answer to the last question. Of course, there is a risk among the CPI indexation and Openreach what I’m trying to say there is, whatever happens their indexation on Openreach’s lines copper and fiber. I’m not going to get drawn into the deal of Equinox 2 because it’s a confidential document that is going through the CPs and Ofcom and, but we feel really confident, really confident that that is a very competitive proposition that will help everybody.
Our customers and the end consumer debt outstanding products and outstanding technology at very good value for money. From a business case point of view, this makes a total sense. So, to your core question which is under sort of – under both of the Openreach and Consumer CPI indexation pricing underneath both those questions is, can we take the equilibrium in the right place, so that our customers are happy, and we keep the customers we won.
And the answer is we really believe so because we spent years carefully thinking through how each segment is looked after. And so, I go back to what I said, it’s really important to understand it. We are quite sophisticated in the way we should think about customer segmentation and it’s not as simple as a price change.
So, when you look at the different segments and how we approach them and what we offer them. We really, really quite advanced, and make sure that’s tailored to the circumstances and tailored to the individuals in the right way and so far, it’s worth. I will say to you, of course, if there are massive changes in competitive dynamics of course, we’ll respond because I’ve always said to you, we’re not losing market share.
We haven’t lost market share since I’ve been here and we’re not going to stop. What I’ll also tell you is other people seem to make price increases in a more random fashion sometimes. They’re not necessarily lower than ours, but they’re not as transparent as us.
So, we want to be clear with our customers. This is what you get, this is how your prices are calculated. They know what’s happening. We communicated that. And we make sure we’re always providing the best value for money we possibly can above and beyond just price.
Operator
Gentlemen, we have received a question from Jerry Dellis from Jefferies via email. And the question is, Slide 9 suggested that the broadband market was flat in that Openreach is losing actually going to what gives you the assurance that alternative networks might not be gaining some attraction. Thank you.
Philip Jansen
Yes, a couple – I mean – I’m certain – I mean look the broadband market is not growing it has done historically. That is true, right. And that’s to do with the economic backdrop and probably some market pull-forward from COVID that yet so. So, and you can see what’s happened when the market is growing, you can see what happens to our online. So, we are losing less share than we expected. So, whilst I said earlier, that there is a lot of build-out there, the key thing is connections. I keep saying, you’ve got to think about connections because building the network once you’ve got the money and a bit of operational expertise is easy.
It’s connecting customers that ultimately will make a difference and that’s why we are so concerned and happy with the activity of the 27% – by 27% collection rate is what’s important, and that’s what we’re focusing on. So, when we look at the overall business case and Simon mentioned it before, the ARPU change the customer satisfaction change is so important that the investment of the GBP15 billion never looks more – never look more attractive than it does now.
Operator
Thank you. And our final question comes from Stan Noel from Bernstein. Stan, please go ahead.
Stan Noel
Can you hear me well?
Philip Jansen
Stan, I can hear you.
Stan Noel
Okay, cool. Just a clarification. Sorry, I know you – this was covered in the previous question. But going back to the wholesale pricing updates for Openreach that is that where you would like to have an acceleration of migration to FTTP, is this acceleration embedded in your assumptions for in the GBP4.8 billion of CapEx in the coming years? Thank you.
Philip Jansen
The answer is yes.
Simon Lowth
The, the question – maybe we only – I think we quoted, which was we are seeking to really drive continued fast take up in Openreach FTTP and is that delivery on that reflected in the 4.8 billion CapEx that we guided to its peak and for next year. That’s what we heard the question to be.
And the answer to that is yes, it is, we are confident in delivering our capital plan at 4.8 huge opportunity to improve our CapEx productivity through our cost transformation efforts but also rigorous prioritization which we do. As a matter of course a lot of opportunity to prioritize away from some of the areas of legacy spend. We just take an example on non-fiber CapEx was down something like 20% to 30% so far in the year. So, just gives you a sense of we’re pushing back on non-strategic CapEx, but that obviously, Stan. Thanks for the question.
Philip Jansen
Thanks everybody. I think that’s the end of our call. Appreciate all your questions as ever and interest in BT. See you soon. Thank you.
Operator
Thank you, everyone. That marks the end of your webinar. Thank you for joining and please, enjoy the rest of your day. Goodbye.
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