Earnings

BT's outgoing CEO bullish on 5G revenue potential as the firm upgrades its outlook

Key Points
  • BT CEO Gavin Patterson said he expected to see new revenue streams from 5G in "two of three years' time."
  • The telecoms firm reported an increase in first-half earnings and upgraded its guidance for the full year.
  • Patterson said the firm was on track to achieve the new strategy BT laid out in May.
BT CEO: Will see new revenue streams from 5G in 2-3 years
VIDEO1:4901:49
BT CEO: Will see new revenue streams from 5G in 2-3 years

BT Group's outgoing chief executive on Thursday sounded a bullish note about the potential for 5G to create future revenues for the British telecommunications firm.

The U.K.'s biggest telecom firm reported an increase in its first-half earnings Thursday and upgraded its guidance for the full year. It posted profit before tax of £1.3 billion ($1.7 billion) for the six months to end September 30, up 2 percent year-on-year as growth picked up in consumer business.

"I think the business case for 5G initially is going to be about delivering more efficient networks," BT CEO Gavin Patterson told CNBC's "Squawk Box Europe" on Thursday.

"Consumption of data is increasing about 30 to 40 percent a year and to keep up with that and ensure it doesn't go all into pricing that it's delivered in more and more better valued services for customers, 5G is a much more efficient way of delivering data."

5G — the next generation of mobile networks — is a technology that many in the telecom and tech industries are racing to develop. Auctions where telecom companies bid 5G radio frequencies have helped countries raise billions from firms seeking to gain a footing in the space. Italy recently raised a record $7.6 billion through a spectrum auction.

"In two of three years' time, we'll begin to see I think new revenue streams — particularly in the B2B (business-to-business) space — being built off the programmable nature of the network," Patterson told CNBC.

He noted that BT had launched "the first 5G alpha trial in the U.K." in London's Canary Wharf site this quarter, and that a full roll-out would happen next year. He said that would make Britain "one of the first countries around the world to be offering 5G services."

BT CEO: Strong enough to invest in fixed and wireless
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BT CEO: Strong enough to invest in fixed and wireless

Late last month, BT announced the appointment of Worldpay boss Philip Jansen as its new chief executive. Jansen is due to replace Patterson on January 1 2019, following a brief handover period.

In June, Patterson announced he would stepping down as CEO on the back of an investor backlash after the company unveiled plans to cut 13,000 jobs in a bid to cut costs by £1.5 billion ($1.9 billion).

"In terms of my own situation, I've been on the board for over 11 years, CEO for over five years, sometimes it's just time for a change and I recognize that and I want to make sure the business is handed over in a positive way in a forward momentum."

Patterson said the firm was on track to achieve the new strategy BT laid out in May, which aims to deliver sustainable growth with a focus on improving customer experience with new "converged" product offerings and transforming the firm's operating model.

"There is a lot to do. I think we've demonstrated today that we're well on that track, and I'm looking forward to handing over to Philip (Jansen) with a positive momentum."

Patterson received a total of 2.3 million pounds ($3.1 million) in the year to the end of March, according to the company's annual report — basic pay of 997,000 pounds plus a 1.292 million pound bonus, according to Reuters. He had missed out on a bonus in the previous year after a number of setbacks.

Shares of BT are down more than 13 percent year-to-date. But Thursday's financial results helped BT's stock price spike 9 percent in morning trade.