By Kristy Dorsey
BT has scrapped its final dividend along with all payments for the coming financial year in a bid to save billions as it prepares to accelerate the build-out of its fibre-to-the-premises (FTTP) network.
The announcement came as BT unveiled its results for the year to March 31, which showed a fall in revenue and profits. This included a £95 million charge to cover rising bad debts as a result of the coronavirus pandemic.
BT, which faces a powerful new rival with the proposed £31 billion merger of Virgin Media and O2, said it will also halve its annual dividend to 7.7p per share when payments resume in 2022. In total, the retrenchment on dividends will save the company an estimated £3.3bn.
READ MORE: Call for investigation as O2 and Virgin Media agree £31bn merger
Chief executive Philip Jansen, who recently recovered from Covid-19, said the company will not be providing guidance on the current financial year because of the pandemic. The full impact will only become clearer “as the economic consequences unfold over the next 12 months”.
“In order to deal with the potential consequences of Covid-19, allow us to invest in FTTP and 5G, and to fund the major five-year modernisation programme, we have also taken the difficult decision to suspend the dividend until 2022 and re-base thereafter,” he said.
The company’s FTTP network, which provides superfast broadband via fibreoptic cables direct into the home or office, currently passes 2.6 million UK premises. BT has upped its FTTP target and now intends to reach 20 million premises by the mid- to late-2020s, having previously pledged to reach 15 million within that timescale.
READ MORE: BT removes home broadband limits during pandemic
It is also launching a “radical simplification and modernisation programme” intended to deliver £2bn in annualised savings over the next five years. This follows a three-year, £1.6bn cost-savings plan that was completed 12 months ahead of schedule.
Revenues for the year to March 31 were down 2% at £22.9bn. Pre-tax profits fell to £2.35bn against £2.67bn previously.
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