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BT Group PLC on Thursday lifted its dividend as it forecast significantly improved cash flow in the coming years now that peak investment in its full-fibre roll-out has passed. Looking ahead, BT said it would focus on the UK and ‘explore all options to optimise our global business’. Shares in the London-based telecommunications provider rose 8.4% to 122.60 pence in London on Thursday. Commenting as BT unveiled results for the financial year ending March, recently installed Chief Executive Allison Kirkby said: ‘Having passed peak capex on our full-fibre broadband rollout and achieved our £3 billion cost and service transformation programme a year ahead of schedule, we’ve now reached the inflection point on our long-term strategy.’ Kirkby said this gave BT the confidence to provide new guidance for ‘significantly increased short term cash flow’ and set out a path to ‘more than double our normalised free cash flow over the next five years’. Kirkby predicted that capital expenditure will reduce by around £1 billion post peak first to the post build, with normalised free cash flow of around £2.0 billion in financial 2027, and around £3.0 billion by the end of the decade. In financial 2024, normalised free cash flow was £1.28 billion, down from £1.33 billion a year prior. Kirkby said the enhanced cash flow allows BT to increase its full-year dividend by 3.9% to 8.0 pence per share from 7.70p a year. Pretax profit for the financial year fell 31% to £1.19 billion from £1.73 billion the year prior reflecting impairment of goodwill and increased depreciation. BT said it recognised a non-cash impairment of goodwill of £488 million as a specific item, reflecting a decline in profitability in recent years. Adjusted earnings before interest, taxes, depreciation and amortisation rose 2.1% to £8.10 billion from £7.93 billion as revenue flow through and cost control more than offset cost inflation and one-off items. Revenue edged up to £20.80 billion from £20.68 billion. Price increases and fibre-enabled product sales by broadband provider Openreach and increased service revenue in the Consumer division were partly offset by legacy product declines and a one-off revenue adjustment in the Business division, BT said. BT pledged to make a further £3 billion of gross annualised cost savings to be reached by the end of financial 2029. This will cost £1 billion to achieve, BT said. Net cash inflow from operating activities fell 11% to £5.95 billion in the recent year from £6.72 billion the year before. Net debt was £19.5 billion, rising from £18.9 billion a year prior. This increase was mainly due to scheduled pension scheme contributions of £800 million, BT said. BT noted strong Openreach customer demand for first-to-the-post broadband with net adds of 397,000 in the fourth quarter. BT said it expects that the broadband market to recover over the medium term but, if it remains weak over the next 12 months, then BT can expect Openreach’s broadband base to be hurt by moderately higher competitor losses. For financial 2025, BT forecast adjusted revenue to be flat to up 1%, Ebitda to be around £8.2 billion, and normalised cash flow to £1.5 billion. CEO Kirkby said that, as BT enters the next phase of its ‘transformation’, it is ‘exploring options to optimise our global business’. ‘This will create a simpler BT Group, fully focused on connecting the UK, and well positioned to generate significant growth for all our stakeholders,’ she said. Copyright 2024 Alliance News Ltd. All Rights Reserved.
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