BT hikes ultra-fast broadband targets and maintains divi amid falling earnings
The telecoms group reported a 2% fall in underlying earnings to £7.4bn for the year to March 31.
Telecoms giant BT has ramped up targets for the roll-out of ultra-fast broadband as it kept shareholder dividend payouts unchanged despite falling sales and earnings.
The group’s new boss Philip Jansen pledged to increase its target to connect four million premises with full-fibre broadband by 2020/21, up from its previous goal of three million.
And BT revealed a new “ambition” to connect 15 million premises by the mid-2020s, up from its previous target of 10 million.
While we are really well positioned in a very challenging and competitive UK market, we have a lot of work to do to ensure we remain successful and deliver long-term, sustainable value to our shareholders. Philip Jansen, BT chief executive
The group also offered a reprieve to its army of small investors as it said it would keep its dividend unchanged at 15.4p a share and hold it at the same level for the new financial year.
There had been speculation ahead of the results that BT was considering cutting the payout to help fund its full-fibre target hike.
The move to hold the divi came as it posted a drop in annual earnings and warned that sales and profits are set to fall over the year ahead amid a “very challenging and competitive UK market”.
The group reported a 2% fall in underlying earnings – the group’s preferred measure – to £7.4 billion for the year to March 31.
It cautioned that underlying earnings are expected to fall to between £7.2 billion and £7.3 billion over 2019/20 – the third year of declines in a row – with a drop of around 2% in adjusted revenues.
On a statutory basis, however, pre-tax profits lifted 2% to £2.7 billion in the year to March 31 on revenues 1% lower at £23.4 billion.
Mr Jansen, who took on the top job in February, said: “Since joining the company three months ago, it has become clear to me just how fundamental BT’s role is in connecting our society.
“While we are really well positioned in a very challenging and competitive UK market, we have a lot of work to do to ensure we remain successful and deliver long-term, sustainable value to our shareholders.”
It added that restructuring efforts were on track, having achieved annual cost savings of £875 million.
BT swung the axe on 13,000 jobs last year under its revamp plans.
The group legally separated from its broadband infrastructure arm Openreach last year as part of an agreement with regulator Ofcom and the industry has been under pressure to improve full-fibre broadband roll-out across the nation.
Mr Jansen said: “Our aim is to deliver the best converged network and be the leader in fixed ultrafast and mobile 5G networks.
“We are increasingly confident in the environment for investment in the UK.”
Russ Mould, investment director at AJ Bell, said: “After the 5% cut to the interim payment, shareholders in BT could have been forgiven for fearing the worst, so they will be pleasantly surprised to see new chief executive Philip Jansen and the board’s decision to make an unchanged full-year dividend.”