- BT lost 491,000 Openreach customers in the 12 months ending in March
- Still, it plans to pay investors a final dividend of 5.69 pence per share
BT Group has increased its annual dividend despite a significant drop in the number of broadband customers.
The telecoms giant lost 491,000 Openreach customers in the 12 months ending March, amid slower-than-expected growth in the wider broadband market.
Still, the company plans to pay investors a final dividend of 5.69 pence per share, taking the full-year payout 4 percent higher to 8p, thanks to better-than-expected free cash flow.
Rewards for shareholders: telecoms giant BT Group has increased its annual dividend despite the number of broadband customers falling significantly last year
And Allison Kirkby, the company’s chief executive, said the payouts were possible because BT expects future cash flow to increase significantly.
She said the company had reached a “tipping point” in its long-term strategy after delivering its £3 billion cost-cutting plan a year earlier and passing the peak of capital investment in its fiber broadband rollout.
As a result, BT now forecasts normalized free cash flow to rise from around £1.5 billion this year to £3 billion by the end of this decade.
BT Group shares rose 8.7 per cent to 122.7p on Thursday morning, making them the best-performing FTSE 100 stock, although they are still down by around a quarter over the past 12 months.
Kirkby said: ‘As we enter the next phase of BT Group’s transformation, we are sharpening our focus to be better for our customers and the country by accelerating the modernization of our operations and exploring options to optimize our global operations .
‘This will create a simpler BT Group, fully focused on connecting Britain and well positioned to drive significant growth for all our stakeholders.’
For the current year, the company expects adjusted revenues and profits to see modest growth at best before the downturns.
BT also plans to cut capital expenditure to around £4.8 billion, having already cut it by 3 percent last year, even as its fiber footprint grew to more than 14 million premises.
The group’s turnover rose 1 per cent to £20.8 billion in the 2024 financial year, partly due to price increases and Openreach’s increasing sales of fiber products.
However, pre-tax profits fell by more than half to £855m, largely due to a £488m goodwill write-down on operations.
Mark Crouch, analyst at eToro, said: ‘The biggest problem BT faces is the fiercely competitive market in which they operate.
‘Broadband providers are trying to undercut competition, driving down prices, which in turn has increased pressure on BT’s margins. With hungry competitors ready to gobble up dissatisfied customers, BT will have to work even harder to keep them.”