Thanks, Shreya, and welcome, everyone. Presenting on today's call is Philip Jansen, Chief Executive; and after prepared comments, Simon Lowth, Chief Financial Officer, will join Philip to answer your questions.

[Operator Instructions]

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.

And with that, I'll now hand you over to Philip.

Thanks, Mark. Good morning, everyone, and thanks for joining.

As usual, for our third quarter results call, I'll make some prepared comments before Simon, and I take your questions. I'll summarize the highlights for the quarter and our business unit results, update you on our FTTP investment, and then briefly cover our cash position.

Before diving into the details of the quarter, I want to confirm that we remain on track to deliver our long-term ambition to transform our network to 5G and FTTP, to digitize and automate our systems and processes and to significantly enhance our customer experience through delivery of next-generation products and related services.

So overall, we made good progress in the quarter, and the business performed well given the current market conditions. Against last year's pro forma results, group revenue was flat, while EBITDA was up 1%.

As we said at the half year, normalized free cash flow will be more back ended than last year, and I'll explain why that is and why we are reaffirming our full year outlook shortly.

So the pace of operational progress has continued. So a few examples, our FTTP program is delivering on all fronts.

We've built FTTP to a record 810,000 homes in the quarter, while staying within our cost range of GBP 250 to GBP 350 per home cost, which has taken the footprint to 9.6 million premises.

Customer demand is extremely strong from both CPs and end customers, with orders up a staggering 51% versus last year. And the take-up rate has now reached 29% with 324,000 net adds in the quarter, bringing our total FTTP customer base to 2.7 million.

So we are building like fury, and we are connecting like fury.

So staying with Openreach, we announced regulated price increases from this April of 11%, and we're delighted to say a number of major CPs have given statements of intent to sign up to Equinox 2 once Ofcom has concluded its review of this offer.

In Consumer, we confirmed last month that we will raise prices by 14.4% from April. This uplift is needed to offset cost inflation and pay for our investments.

On average for our customers, it equates to only around an extra GBP 1 per week, and still represents exceptional value for money.

You can see that ARPU has reduced as we've invested to protect the base with the result that churn to date has remained pretty stable in the face of robust competition. And as I've said many times before, we will not stand by and allow others to take our customers.

Despite current cost dividend pressures, and our confidence in Consumer trajectory remains strong. We know that we will be facing a value-focused market, but we were prepared for this, and we are well equipped to compete in this market.

For example, we connected a record number of FTTP customers in quarter 3, taking our Consumer base to 1.6 million. And in mobile, we've extended our award-winning 5G coverage to 60% of the U.K.

population.

Moving to our B2B divisions, as you know, we'll integrate these as a single unit BT Business from quarter 1 next year. This will enable accelerated transformation and delivery of next-generation products and solutions.

It will also deliver at least GBP 100 million of run rate cost and CapEx synergies through the streamlining of management teams, support functions, product portfolios and systems by the end of fiscal year 2025.

Next, we're very pleased to have reached an agreement with our union partners on a consolidated cost of living payment that started last month for our U.K. people paid less than GBP 50,000.

That's 85% of our workforce. Now very importantly, the CWU prospect have agreed to work with us as we continue to transform and modernize the business.

Following the industrial action, operating and service metrics are steadily recovering.

And finally, despite today's market volatility, we are reaffirming all our outlook metrics for this year and beyond. So as I said earlier, we remain on track delivering our plan, supporting our customers and our colleagues, while underpinning economic growth in the U.K.

and delivering for our shareholders.

Now moving to quarter 3 CFU results, which I'll talk to on a pro forma basis, so assuming the Sports JV had been in place last year. While Consumer service revenue grew by 2%, overall revenue for the division was flat, as the benefit of contractual price changes and the return of roaming was offset by lower handset sales as we see customers holding on to their handsets for longer.

EBITDA was up 1% as the revenue flow-through and strong cost control was up against a strong prior year comparator. Enterprise revenue was down 3% as legacy product decline and the migration of MVNO customer were partially offset by continued growth in our SME and SoHo divisions.

While conditions clearly remain very challenging, we're pleased to see sequential improvement once again in both Enterprise revenue and EBITDA.

In Global, revenue was down 2% as lower equipment sales and prior year divestments more than outweighed the benefit of an FX tailwind. EBITDA was flat as cost transformation counteracted the lower revenue.

Finally, Openreach revenue was up 4% in quarter 3 as price rises and increased sales of FTTP and Ethernet offset the decline in physical lines and lower chargeable repair volumes. EBITDA grew by 6%, as revenue flow-through and cost control more than outweighed costs from higher levels of FTTP provisioning and pay inflation.

I should add that the broadband line position, which was down 10,000 in quarter 3, did see some improvement on recent quarters, as reduced market activity and losses from industrial action were counteracted by -- or a seasonally stronger market in quarter 3 and some catch-up in last year's provisioning.

Staying with Openreach, I'd like to share a little more detail on the FTTP program. We are still building out a pace of over 3 million premises per annum.

But most importantly, as I implied earlier, we have begun to industrialize our connections machine and we're now at 29% take-up overall.

However, this does not really give a sense of how take-up has developed over time. So if we were to look at FTTP built just 24 months ago, nearly 50% of end customers using Openreach's broadband network have made the switch to FTTP, supporting higher ARPUs, delivering better end customer satisfaction, and lowering operating costs.

Equinox 2 is designed to accelerate this take up even further.

Before closing, I want to spend a little bit of time taking you through our outlook, which, as I said, is unchanged. Maintaining our EBITDA outlook of GBP 7.9 billion set 2 years ago has meant we have had to deliver an additional GBP 700 million of EBITDA this year, GBP 300 million is a step up from last year's GBP 7.6 billion, then unforeseen headwinds just from higher energy price and pay inflation added around GBP 300 million to costs.

Whilst I'm sure you'll recall; we have also had to deal with the migration of a large MVNO customer.

So to achieve that sort of GBP 700 million swing, we have delivered on cost transformation together with the implementation of price indexation and solid trading in many areas of the business. The plans we are executing set the business up for consistent and predictable growth in the future.

Of course, we also need to convert that EBITDA to cash.

As I said earlier, BT is structurally skewed to deliver much more cash in the second half compared with the first half. This year, our normal phasing has been further accentuated into quarter 4 by 2 factors.

First, very significant CapEx consumption in the first 9 months of the year, as Openreach accelerated its build, including considerable work in progress as we mentioned last quarter, and accelerated take-up of FTTP, resulting in over GBP 650 million worth of more cash CapEx this year-to-date versus last year.

We will unwind some of our work in progress giving us a unit build cost tailwind and, therefore, lower our cash CapEx in quarter 4. The second factor is on phasing a more back-ended EBITDA and receivables delivery than usual, primarily from our B2B units.

So to wrap up, Openreach has built a record number of premises, but more importantly, connected a record number of end customers. As a result, FTTP take-up has continued to increase and is now at 29%.

We expect this to accelerate further in quarter 4, and again, once Ofcom's review of Equinox 2 is completed.

Consumer has connected a record number of customers to FTTP, and can now reach 60% of the U.K. population with 5G.

It's transparent pricing mechanic will help offset the considerable cost pressures in the business and allow us to continue to invest to deliver the quality of service and value for money our customers have come to expect from BT.

Enterprise and Global have delivered a more stable quarter overall, and while the market is still tough, I am convinced that the combined BT business can complete the job of transformation that is already underway in both divisions. So overall, BT is delivering to plan, and we are on track to achieve our long-term ambition.

And with that, I would now like to open up to questions. [Operator Instructions] Operator, could we please open up the lines?

I would like to ask briefly about pricing, please, and your engagement with Ofcom around the recent price changes, or the announced price changes, where they're most interested, if there are any tensions? And also, I suppose the reflections on their investigation into you being sufficiently upfront in contract terms with your customers?

Yes. I mean look, obviously, we are engaged in conversations with Ofcom on multiple fronts all the time, okay?

So it's a really important relationship and given what's happening in our business and in the industry at large. One of the key elements is clearly pricing, right?

There are sort of 2 parts to that. There is the regulated pricing through Openreach, and then there's the sort of retail pricing part for our Consumer business.

I think on the regulated part, everybody understands that the WFTMR had a very clear CPI indexation, a mechanic to it. That's been absolutely necessary to help fund some of these investments that we're making in FTTP.

And you can see that in our description of how we've put our foot down on the gas here in terms of building 9.6 million homes, but also preparing the pathway to the next 6 million, as we described, the sort of network work-in-progress activity we announced last quarter.

So I think -- I hope that the regulator recognizes that the CPI indexation that's inherent in WFTMR is designed to fund this kind of aggressive expansion, which we are absolutely delivering. So the FTTP initiative is now a runaway train both in terms of build, but also now in connections.

And that's what really matters, by the way, is that customers get connections to this new fantastic network. And I hope that they're encouraged by that.

Without the CPI, that's obviously much harder to do. So I think that's -- and that's a long-term regulatory settlement, as you know.

So on the one hand, no one likes seeing prices go up significantly. No one's happy with the inflationary environment, but it is what it is.

And the CPI mechanic is there for a reason because it's to insulate us against massive increase in costs, which, of course, we're seeing by definition. So that's the regulator part.

On the other part, which is the CPI plus 3.9, which we're putting through as we speak moment. Again, the real challenge there, and I think it's a fair challenge, by the way, is have we been transparent and clear with our customers, what the price of mechanic is.

And obviously, we feel we have. And we'll do whatever we can to make sure that is the case.

So I think it's fair to investigate and make sure we're doing everything we possibly can. We research and talk to our customers all the time.

Clearly, we've got millions and millions of customers calling us every month. So I think it's fair to say people understand it.

Do people appreciate and like a big price increase? No.

But again, you got to go back to it, this is the thing with Ofcom, is most they do understand, I believe.

The value for money of what we offer both in broadband and mobile is truly exceptional. It's less than GBP 1 a day to get unbelievable service.

And it's unlimited usage, let's not forget that. It's not gas, it's not electricity, it's not a meter.

So people can camp at home and really spend all their time on our network using as much data as they want for GBP 1 a day.

And therefore, percentage-wise, these look like big increases, but it's GBP 1 a week extra on this price increase on average for our customers. So if you put that in the context of the overall household bill, the relative importance of what we do, and compare it to other things, that's why all our research tells us, although, no one celebrates a big price increase, and they understand why we're doing it.

Adam, I hope that's okay. We're going to move to the next question.

Hopefully you can hear me okay.

We can hear you, Maurice.

So I guess just a quick question on Openreach momentum, please. I mean you've seen stories in the press around CityFibre cutting 20% with their staff, your own broadband numbers inside Openreach improved significantly.

I know you blamed the strike action on the negative number last quarter.

Just curious to see from your side of your view on the sort of the relative growth in the broadband market is changing, if you're seeing any impact from alt net build actually taking market share away from you at all, I think you indicated before, you thought the market was broadly stable in the last couple of quarters. Has the market picked up this quarter?

General views in terms of market dynamic, how Openreach is doing and market share losses?

Yes, I mean -- I'll make a comment and Simon can chip in. I think -- again, stepping back, Openreach has well in excess of 20 million broadband lines effectively, right?

So we've always said over the longer-term, we think our broadband base is going to be broadly flat. And we see a few losses, obviously, as you referenced to certain other players, but that's offset by sort of market growth and other factors, particularly new build, particularly, right?

So at the moment, we've had a double whammy, if you like, in the year because we've seen -- the market for new homes come down, and we've seen a pull forward of people in COVID taking more broadband they would have otherwise done. So and you've also got this third factor, I guess, which is people being a little bit more cautious.

And there is some evidence of a few people taking mobile only, but it's in the noise. And so I wouldn't get carried around any 1 quarter.

What we're looking at here is we're very confident that we can keep the thing roughly flat in the medium to long-term, given what I just said. And I sort of point to what's happening with our base.

The base is enjoying a good migration from copper to fiber and the ARPU is up 7% with satisfaction levels obviously heading in the right direction.

So stable base. Each quarter, we'll bump around a little bit.

We benefited in this quarter from the fact that students came back, yes, we're unwinding a bit of strike action, that obviously hurts us. But again, I need to look at this over across multiple years.

And we think it's going to be broadly flat, but we need the market to come back and new homes to start being built again, and that's not going to happen anytime soon. Simon, anything to add to that.

I think the key point is that Openreach is investing at massive pace scale and building FTTP. And end customers and CPs are really wanting that product.

So the rate of connection and take-up is probably somewhat ahead of our expectation, and clearly, that gives Openreach a huge competitive advantage.

And the small movements in broadband base, as Philip said, more about homes and broadband market overall. We're not seeing any change in sort of competitor loss very much in line with what we expected.

Yes. That's okay.

Just to reiterate, what we're looking at is the mix, which is really good and the ARPU, which is really good and the bouncing around in any 1 quarter. We don't get too worried about as long as there's no megatrend.

And we watch it very, very carefully, but do expect it to be a soft market for the foreseeable future, right, as the economy continues to be under great stress. Given that situation, we feel very incredible performance to be doing those kind of KPI performance I've just read out.

[indiscernible] you're going to put the prices up...

Nick. Sorry, Nick, you have to start your question again.

I think we just missed the mute button. Can you start again?

Yes. Can you hear me now?

Yes. Now in play.

Just a quick question on price structure. So obviously, you're intending to raise prices, and we understand why that is from a market perspective, and as you say, from a value for an upfront the money perspective.

But how does this work, while you're trying to keep the base stable in terms of the loyalty penalty discounts and all the other things that you have to comply with? So in other words, if you raise price on existing customers, how does that impact your ability to be aggressive in the front book market?

Yes, Nick, great question. I mean, firstly, I would just step back a little bit and just make sure we are [indiscernible] If you look at -- take up our drop-through, what we're saying here is -- we put our prices up by CPI plus 3.9%.

And in the end, in the end, we think the net drop-through after everything of cost increases and recalibrating what we're offering our customers through the year is a drop-through between 30% and 50%.

In this year, we think we're going to be sort of a bit closer to the upper end of the range. For next year, we'll probably be at the lower end of the range because the number is much higher, obviously.

And what actually happens is the prices are completely transparent. It's in the contract.

They all go up in April.

And so you'll see next year, exactly see what you're seeing this year, which is quarter-on-quarter, you'll see a slight degradation and that just goes down over the course of the year, as customers ring up and come on to new contracts, a; and b, we deal with some of the things you're talking about because what we don't want to do is create lots of anomalies in our customer base.

So we've got a machine that Mark runs, which manages that price, which is to keep everything in equilibrium. And I've talked about this for 4 years.

And it really is high customer service, strong NPS, great value for money, low churn. And if you look at our KPIs, all of those things are happening, and the revenue is going to go.

Obviously, you've got handset sales, which are obviously offsetting a little bit, but you're going to see increased revenue and you're going to see drop-through in the EBITDA line. And that's going to happen this year, and it's going to happen next year.

But the only thing I'd say to you is just to bring it a bit more to life, and Nick, is we've always said we're not in the business of losing customers. So we will compete really heavily to maintain our market share.

But the mechanic of the price increase is done. And it's then as people ring up, remember, they average have a 2-year contract.

As they ring up, we discuss with them what's the best package for them.

And of course, we've got much more in our locker now with FTTP and 5G and combining things together and bundling higher speeds and a whole host of other factors and features into mobile. So overall, what we look at is customer lifetime value.

And I can reassure you've got to see this in our KPIs, we're making sure we've got the right share of the right customers, who will stay for us as long as possible.

It's actually on the guidance for the full year and specifically on EBITDA. Looking at the run rate implied for the fourth quarter, it does imply an acceleration in EBITDA.

And I'm just trying to understand, you do have some headwinds as you mentioned, from customers optimizing during the course of the year. You also have some higher labor costs perhaps coming in the fourth quarter.

So I just wanted to get a bit more understanding as to what can drive this acceleration, and perhaps I'll follow Maurice's example in asking a bit more than a question. If you can also give us a bit of clarity on energy just for the fourth quarter, but how you're thinking about it into next year?

Yes, sure. Look, good questions.

Simon can give you the answer to those.

Yes. So firstly, on Q4, I mean, we've reaffirmed the outlook for EBITDA and we're going to see continued strong trading momentum in Consumer and Openreach that you've seen during the year, benefiting from the continued strength of the pricing.

But do remember, yes, there's been some pay award, but we continue to drive our cost transformation hard, and that simply ramps up through the course of the year. So you'll see continued strong trading from Consumer, Openreach.

And also as we generally see in Q4, our B2B units typically deliver a stronger Q4 than the first 3 quarters. And of course, that will be further characterized this year because the Virgin MVNO of course dropped out Q4 last year.

So we don't have that same quarterly comparator headwind.

So that's on the EBITDA, reaffirming that the outlook, continued trading momentum in Openreach, Consumer, a bit of a step-up in B2B, and a big driver on the continued cost transformation.

On energy, for this year, we are largely hedged. We've also had the benefit of the energy scheme from the government.

So I think not an awful lot more to say on that for this year. For next year, we're following our policy, which is we progressively look to hedge our demand.

We've made good progress in hedging next year's energy position through a combination of our purchase agreements and market purchases.

As you know, power price has been somewhat weaker and there's been some great liquidity. So we're ramping up the hedges for this year.

Clearly, we still got some exposed position, and we're still exposed to sort of volatility energy prices. We'll update you at Q4 when we'll have the hedge book finish for the year.

I just had a follow-up to Nick's question, Philip, in your comments. Helpful range of drop-through's that you anticipate and see from your price rise in Consumer 30% to 50%.

You touched on it, but I just wonder, if I could dig in a bit more on what are the key inputs into that drop-through, which is clearly competition.

Could you just give us an update? It looked like competition have picked up a bit this quarter, and people you're trying to work out what your Consumer broadband net adds are or were in the quarter.

They looked a bit weaker, but I think there's some issues with rounding there.

Anyway, if you could just give us an update on the degree of competition you're seeing and both in Q3 and in the run rate into Q4, and how you've been able to maintain customers through that increasing competition, if there was one?

Yes. Yes, look -- you're right, it's a very competitive market, but we're competing really well in it.

And again, we monitor many, many elements of some of the things that we report on. So obviously, at the macro level, you can see the churn, right?

So we kept churn at consistent levels, despite a more competitive market. And yes, we are reinvesting to keep our customers.

And that's what you see is the ARPU through the quarters comes down. But again, it's going to take a big step up.

But the thing is it's going to take a big step up by everybody. That's the thing.

And obviously, we announced our pricing mechanic a long time ago. Everybody has to put their prices up for the reasons that are obvious, right, given what I said earlier.

So I think there's a level playing field from that point of view.

And I think there's a general understanding that a more stable market is better for everybody. And I'm seeing that in terms of the churn is low for most people.

So in our -- as we look forward, the reason I said we expect it to be at the lower end is, a, the pricing is higher; and b, we think the competitive intensity is higher.

So -- and also, there are a bunch of people here who don't get price increase, and we've got a social tariff, we got an landline only. So it's a blend of things.

And also on the drop-through, clearly, the cost that Consumer are experiencing that by definition are going up not least all they get the Openreach cost that everybody else gets as well.

So very competitive market. I think we've got a handle on it.

I mean, we're very well prepared. And one of the great things that the Consumer can do is get organized and plan for how to manage the customers with a lot of science, a lot of data and a lot of understanding of which things to offer which customers and why and when.

And that formula has proven to deliver. This year, we're on our targets, and I think we'll deliver the same next year.

I'm notwithstanding it's going to be very competitive market, of course.

Just about Consumer fixed service revenues because they've seen a notable slowdown quarter-on-quarter, despite the benefit of the 9.3% price rise. So if I look at the numbers over the past 3 quarters, Consumer fixed service revenues were plus 6% and plus 4%.

And in the recent quarter, it's plus 1%.

So can you comment on what is driving the slowdown, and give some color in terms of both net adds and ARPUs, and how should we think about Consumer fixed service revenue growth into Q4?

Simon, do you want to have a go at that?

Yes, I mean, the -- as I think we've already mentioned through the year, the price rise goes, and I think Philip touched on this.

Two dimensions, firstly, ARPU. As we've said, we put through the price increases on the 1st of April.

During the course of the year, we engaged with our customers. We ensure that as they come up for renewal, they've got the best offer for them and that does include some ARPU reduction or indeed putting more benefits into their package.

And therefore, during the course of the year, as you can see, we get some quarter-by-quarter attenuation of the ARPU, and that flows obviously through to the fixed revenue.

The broadband base is overall broadly flat, down a touch, but really very modest. It's mainly drop-through of some attenuation of ARPU.

And of course, as we get into the 1st of April next year, we'll put through the price increase and we'll continue then on the same pattern of working with our customers to get them on the best package, retain them, but seeing some attenuation through the year.

So it's really just what you're seeing in the fixed revenue is exactly the pattern that Philip described.

Sorry, it's going to happen again next year. I mean, you're going to see a step-up from quarter 4 to quarter 1.

As the price increases go through. You're going to see quite a big step up.

If you look back, you'll see it happened last year, quarter 4 to quarter 1 goes up quite considerably. And then each quarter, it will come down.

And that's because people are joining on new contracts.

And what we're trying to do is make sure that we don't have any big extremes. So of course, we're dealing with the dynamically with the whole customer base.

So if you're at the very, very top end paying a super-premium and there are some people like that, obviously, when they come to reconnect, we got a better deal for them. That is how the market works.

And in totality, it ends with a drop-through of somewhere between 30% and 50% in the Consumer EBITDA. And that's the most important thing, as long as we're looking after our customers, and they see good value for money.

We keep churn along and maintain our broadband base in the way that we described. Simon, do you want to say something?

Just to finish, there's a couple of other factors. I mean, Philip mentioned one of them.

One is that we are seeking to -- we engage with customers, vulnerable customers, to ensure that they have access to the Home Essentials product. That has a little bit of a bearing.

And then we're also seeing some small reduction in our Solus voice customers as we really try to drive to all IP to enable PSTN closure. These are not really not material in the grand scheme of Consumer level on BT, but they have a -- we got a small impact quarter-on-quarter.

Just wanted to follow-up on Maurice's question around Openreach. Last quarter, you kindly gave some breakdown of what was the impact of strikes, and as you mentioned, the underlying performance is sort of stable.

Just to help us understand what that underlying performance is? Can you break down what was the impact of this quarter strikes?

And also, what was the impact of any catch-up from the Q2 strikes, just so we can sort of back out, I guess, the organic trend in broadband adds and Openreach.

Simon, do you want to give [indiscernible] on that?

Yes, sure. No, I mean, overall, the Openreach lines quarter-on-quarter, so I'm talking about broadband lines here, down it's about 10,000.

We estimate that the impact of industrial action through essentially orders being placed and then delayed in being converted was something like 20,000. Strip those out, clearly, the lines would have been up about 10,000 in the quarter.

The specific dynamics for that, firstly -- for the overall dynamic, firstly, some continued churn to competitors. We'd always expected that.

I think as I said earlier, in truth, that driver is possibly somewhat lower than our expectation. I think a reflection of the great progress Openreach is making in rolling out fiber and migrating its customers.

We've had -- that has been offset by still a relatively subdued new house market, which Openreach gets the majority share. That's been somewhat subdued.

But what we did see in Q3 relative to Q1 and Q2 is we saw the normal Q3 seasonal uptick in the broadband market generally associated with school, university returns, people moving on and setting up their own home. So that gave us a bit of a boost in Q3 relative to first 2 quarters.

I hope that helps you. It's really -- it's a continuation of what we've seen in the year with a more buoyant market in Q3, a more buoyant seasonal market.

Where do you think working capital should be falling out this year? And then looking into next year, you obviously have the Sports JV where you've got that 700 million provision that will be unwound, I think, through working capital, giving you a bit of a noncash EBITDA boost.

But consensus only has minus 50 million of working capital next year. Can you just maybe talk us through where your expectations are and what the moving parts are on working capital?

Sam, we got -- I guess most of the last bit. We didn't hear the intro.

Can you just repeat it for me?

Sorry, terrible headphones, I should upgrade them. It was just on working capital, kind of what the moving parts are for next year, really.

I see consensus is around minus 50 million. I think you have quite a drag from the Sports JV, which has being unwound through working capital.

So just what the moving parts are on working cap for next year?

Okay. Simon, can you do that?

Yes, the shape of working capital for next year, we don't expect to be really materially different from this year. It's always a seasonally skewed phasing.

So we always have a negative working capital outflow in the first 9 months, followed by a very strong inflow in the fourth quarter. That's the pattern we're seeing this year.

And we expect that pattern next year.

Yes, you are right that the Sports JV has a working capital impact, which will slightly increase the working capital. The network will -- deteriorate the net working capital position for next year, but it's offset the EBITDA.

And so I don't think it's a major factor on the overall cash profile year-on-year, Sam.

I was actually going to ask a very similar question to Sam's, so, if possible, I'll try and ask it in a slightly different way, which I think consensus for next year is looking for around GBP 1.1 billion of free cash flow, given what might happen with working capital, maybe with interest, with tax. So some of these below-the-line items.

Do you think that kind of level is a sensible level for consensus to be at, at the moment?

Thanks for the question. I mean, we're comfortable with consensus beyond this year.

Obviously, we'll give you the normal update in May and talk you through all the different moving parts.

Can you hear me, okay?

Yes.

So just a point of clarification on energy costs, is that a pass-through for Openreach to the ISPs? So BT is only really exposed to the bit that BT that customer-facing businesses use.

And actually, my question is, I saw the code power applications by the alt nets have been slowing. And I wondered whether you're seeing that in the demand for passive infrastructure request?

Or are those still accelerating for now?

On the first question, I mean, yes, where CPs are using the Openreach infrastructure and drawing power, yes, they pay for the cost of the power they consume at the price that it took us to procure it.

I think in terms of your second question, we're not seeing any particular change in the request for passive infrastructure. It's in line really with what we'd expected and reflects a progressive build plans by alt nets.

Although, as we have seen, typically, the plan and ambition is rather higher than what we actually see on the ground.

Can you hear me, okay?

Hi, David.

Okay. I guess, it's just back to the drop-through, the price drop-through discussion.

And I think that my colleagues before have pretty well covered the sort of dynamic and how we should expect revenues to evolve. But I guess my question is a little bit more theoretical.

That's -- that's quite a poor rate if you're down towards the 30% or so levels next year versus the -- perhaps negative sort of headline perceptions both from a regulatory and a political perspective, the Daily Mail, et cetera. Do you think there's almost a discussion to be had around price elasticity here, which is you could actually lower the price rise on the headline price rise, but you could actually deliver broadly the same result?

I'm just wondering because to announce 14.4% and only really monetized 4, feels like, I guess, a poor resource. I might be sort of wording that badly, but do you feel like there's something missing here.

And I know you feel very, in my view, accurately describe the value that it brings, but perhaps that message is just still not getting through to the customer. So I'm just interested in your thoughts theoretical?

No, I think it's a really interesting point. One thing I think maybe I'm not forgetting, maybe you're not acknowledging it to me is the drop-through is affected by, yes, anything we change with our customers on pricing, but don't forget the massive cost increase that we're experiencing.

So you've got to remember there's -- we feel inflation, as we've said, on multiple fronts.

Pay bill is close to GBP 6 billion. So you've got to recognize that there are cost pressures energy Simon has talked about across the board.

Everything is going up. So at that point, you've got to remember when you look at the drop-through.

I think it's a good point on the theoretical point. There is definitely a perception that prices are going up by 14.4%, and they do stick there, and everyone gets it and they get compounding of another big price increase the following year.

That's not how the market works.

And that's what we're saying to you is -- and actually, we've got a mechanic, which we think is absolutely transparent, and it gives you a predictable outcome, but you also know the timing of it. And I think there's a virtue of the predictable contracts, right?

So we can actually plan for it, manage it as opposed to being random. So actually, the mechanic, we think actually works.

I can understand from a mathematics point of view, just looking at spreadsheet, you think yourself, hang, on a minute, your revenue should go up by 14.4. What are you giving it all away for?

But the whole point about it being a competitive market, it is.

And we set ourselves out to compete well, but not withstand the point that prices need to go up on average overall, and they are. And this is the second year we're doing a significant price increase, and we think and that's the argument with Ofcom, by the way, which is why we think we'll be fine.

In the end, if the drop-through is only 30%, maybe a bit more this year, and all that ends up going to CapEx, and we spent so much on the network to invest in the future, that's sort of the message, which is why we're getting support, I think, from the main stakeholders, both the government and Ofcom to keep going down the path we are. Notwithstanding checking that we're being totally transparent with customers on pricing mechanic.

That's how we think about it.

But I understand what you're getting at because we get a lot of negative publicity on the price increase. When in reality, over the course of the year, prices averaged out below that because people are on 2-year contracts.

And when they recontract with us, we give them the best deal we can.

Listen lots of questions on Consumer and Openreach. I'm feeling a little bit sorry for Enterprise.

So I'll ask one on that if that's okay.

I was wondering, if you could just comment on the competitive dynamics in Enterprise. Obviously, we've seen retail broadband line loss in Enterprise this quarter, the worst it's been for several years.

So if you could talk about the competitive dynamics there and also the logic of the merger between Enterprise and Global to create BT Business, the synergies there? And kind of why now?

Why does it make sense to do it now?

Yes, sure, Carl. I mean on Enterprise, there's some encouraging signs on SoHo and SME, as you saw.

And mobile is modestly up. So there are some positive signs.

I think in the other part of the last contracted base, which we've always talked about, continues to be softer than we would like and that remains challenging.

So to your point about why, why now, we have a lot of change going on in both divisions, and we wanted to sort of get the -- the bulk of that done, that was independent to each place, and that's what we've been doing over the last couple of years. So I think they are very much stabilizing in the way they operate.

So we've got people in certain places doing the right stuff. I think this is the right time now to look at it as one entity.

And so it's partly to deliver the cost savings, but the timing is about being able to get those cost savings without turning the business upside down. So it's a lot of change.

I mean, they've changed a lot. If you look at Global, we've divested 30-plus entities over the last few years.

That business is probably see is firming a bit, stabilizing, and the return on capital is much better than it ever was. So it stabilized.

SoHo, SME, mobile in good shape. The large contract business and corporate and public sector is under pressure in the U.K.

and that can benefit from some of the thinking in Global and vice versa. So we've got a really good group of people in the corporate and public sector working with VAS, [indiscernible].

He's working through a new plan. I think he comes out of global originally.

So there's lots of good reasons why now is a good time.

So we've got the right management in the right place at the right time to get the synergies. But as important as the 100 million synergies is to make sure that the products and the services that we're offering those customers are fit for purpose in the new world of cloud and multi-cloud -- secure multi-cloud, software-defined networks or voice over IP, all those newer areas, many of which are growing quite nicely.

We just need to get more of that kind of stuff and see the back of some of the legacy voice declines you know well. So it's a good plan, a tough market and VAS is getting itself in the right place.

Yes, I mean, look, obviously, there are sort of 3 main elements on CapEx run rate, EBITDA and obviously receivable. I'll let Simon just give you his perspective on that because, yes, of course, some of the indicators are -- need to be in the right place at this stage, and they are.

So Simon, do you want to just give your view on that?

Yes. No.

I mean I think Philip touched a bit earlier. But the Q4 cash flow delivered through 3 primary things.

I mean, obviously, EBITDA will step up further and to underpin the 7.9 billion outlook. We took the question on a bit earlier, very much in line with our expectations.

Second, very importantly, cash CapEx will drop significantly compared to first 9 months of the year, it will be probably lower than Q4 for last year when you recall, we actually have a big CapEx step-up. Philip explained the reason for this.

It's that we've moved extremely fast in FTTP build in Openreach in the first 9 months. We've built significant whip have been completed 9.6 million premises, but we've actually started work on probably another 6.

So we'll unwind that with lower unit cost and see much lower cash CapEx.

And the exit rate of December on the cash CapEx run rate is where we needed to be to deliver on the Q4 outlook. So that's the second cash CapEx.

On the third, which is the working capital inflow as it always does in Q4, leading to an inflow principally driven by timing of collections and receivables. And again, the team's sales and collection teams, they got clear line of sight, they got the clear plans.

And indeed, the collection rate, again, as we exited December in our B2B unit was pretty much where we needed it to be. Of course, there's not just BT involved in this, it's customers as well.

And so, there's lots of work to do in Q4, but we're very firmly focused on that.

Yes. And can I just -- just I mean just as it relates to back up one on cash flow, just to repeat, I'm sure you've all got it, but we haven't had a question about it, but I'm going to say anyway.

This cash CapEx that we spent of 660 million more in the 9 months compared to the previous year, that is strategically very important. So we've explained what's happened on the build and the connection rate to connect 300,000 customers in the quarter to build 810,000 and to time the pump for 15 million households using another third-party contractor labor and our own to get ourselves strategically positioned in the right place, so we can put our foot down on the connections next year.

It's probably the most important thing that we've talked about today. I haven't got a question on it, because I guess you've all understood it, but that's the decision we took is to -- and it's a tough decision to put our foot down on build and connections in the face of an economic storm, I'm really happy with the outcome, 29% take-up, building like fury, connecting like fury.

Any questions left, Mark?

Yes. I think, she have a couple of more.

I've got a question. You mentioned at the start of the call that if you look at the early cohorts of fiber that you rolled out, you're now at 50% penetration rates, obviously, very good take-up rate.

I wondered if you could give us a little more color on what you're seeing around trends and economics around that?

And I guess the things I'm interested in are if there are interesting change around market share, you're seeing, I mean, I presume quite a bit of this build is in Virgin Media footprint here is obviously to be interesting, where you underpenetrated how that's impacting?

And then similarly, any sort of comment you can give around wholesale and retail ARPU trends in that footprint area? Just so as we think about as your fiber build progresses, how that can impact economics?

Okay. That's a great question.

The answer is yes, we've got lots of encouraging underlying indicators on that 50%. It's a key number.

Anything built 2 years ago, that half of them on FTTP is a very significant number, and you've already put your finger on the button here in terms of what it means from a market share point of view. And we've got it by different slices of places in the country including rural areas, cities, towns, highly urbanized, very densely populated.

Every slide you can imagine, we can see it.

So I think we'll probably provide a bit more info maybe in May as to what those things might mean. So when we finish our full year, we'll come out with a full build number.

Hopefully, an accelerate the connection rate and a sort of might well do a bit of a deep dive on your question because you can -- there's some -- I've given you a sense of the build and the connection rate in a macro sense. I've laid the breadcrumbs of 50% where we built it 2 years ago.

You can imagine there's a whole host of things hanging off the back of that, and I'll give you 1 other copper recovery.

So in places where we are a long way down the path, we're beginning to work on how we get the copper out of the ground, which, as we all know, is potentially worth quite a lot. So I can't do it now for you, Akhil, but we will try and lay out a bit more of it, why the build and I talk about the fiber runaway train.

It's a runaway train now. Why is that because of all these indicators I've shown today and a few more that are underneath the 50% number that you've rightly picked up on.

Sorry, I can't give you more today, but wait until May.

Just a couple of questions about Enterprise, if that's okay. I mean the Enterprise trends at the EBITDA level looked quite a bit better this quarter.

Was there anything lumpy in terms of savings that came in? Or is that just underlying business improving?

And I mean, obviously, ex any contract implications or including the MVNOs.

And the second thing was we've talked a lot about price rises at Openreach and a Consumer, but Enterprise faces a big corporate tax rise. As in its customers face a big corporate tax rise for 1st of April instead.

So what are they thinking about the outlook into a 1st of April corporate tax rise? And should we just assume that Enterprise just keeps on getting worse for the time being?

Yes. Look, the answer is there's nothing significant one-off or anything.

So yes, things are stabilizing, but it's still much more to do, right? Because you're right, it's a tough market, and obviously, these businesses more than likely are going to be under more pressure in the coming 12 months.

By the way, I would say in terms of sort of failures and lack of funds, I mean that's not a problem for us, right? We monitor that really carefully.

So what we're doing, as you can imagine is, working really hard with all our large, medium and small customers to make sure we're giving them the best possible proposition we possibly can.

So and actually, unfortunately, as ever, the price increases are going through, right? And so you can see that in SoHo, you can see that in SME, you can see it in mobile as well a little bit.

So the tax rise is going to affect people. They are going to -- we have to be careful, and we're working with them to make sure we deliver the goods as best we possibly can.

Okay, Shreya, I think we've got time for 1 more question. So if we can have the last question, please.

Can I ask 1 more question on the 30% to 50% net drop-through in sort of about CapEx? I just wondered, if the coming EE brand focus on new convergence and connectivity products gives you some more perhaps more for more type angles beyond the renewal discounts that help -- might help deal with the 14.4% price increase, or whether you think the cost-of-living issues for Consumer sort of trump everything, so you an maybe still only end up at 30%.

Just any thoughts on what you might be able to do with the new EE brand.

Andrew, sorry, it's a great question again. The answer is -- so our answer is yes.

I mean it won't be immediate, but the stuff that's being done sort of under the surface from a technology point of view, which I sort of inferred earlier allows us to be able to be much more nimble with our customers.

So the new EE that you're going to see has underneath it a flexible dynamic IT capability, which will allow us to do much more on the conversion. You can see on our conversions.

We sort of -- it's been steady. We haven't grown that enough.

We are selling bundling things together on mobile and we're bundling more on broadband. We're not putting it together as much as we would like.

So and there are lots of reasons for that, but the unlock is the technology. So you're dead right, it's really, really important.

I think in the next 12 months, it's going to be a tough market to be very competitive and some of the technology will arrive in the year, but it's phased over the years. So I wouldn't expect that to help us much in the year, but it will help us in year 2, 3 and 4 unquestionably.

Thanks, everybody, for joining. Appreciate your interest and questions as ever.

I look forward to seeing you all soon.