BT cuts dividends to invest in fibre

Philip Jansen

Investments in fibre and 5G were at the centre of attention for BT as it announced a 2% dip in revenue in its quarterly results.

The operator said that it is scrapping its dividend for the first time in a decade in order to spend £12 billion to boost the national rollout of its gigabit Fibre-to-the-Premises (FTTP) broadband ISP network. BT said that this network could reach 20 million premises by the end of the decade, up 5 million from its initial target.

The news came alongside the confirmation of the merger between rivals O2 and Virgin Media who will in turn invest £10 billion in FTTP.

BT also became the latest major player to remove its financial guidance, with CEO Phillip Jansen prioritising the network needs that have been exposed during the bandwidth-heavy coronavirus pandemic.

The operator also reiterated that it will not furlough staff as a result of the health crisis. Jansen said: “We have not furloughed any staff and, whilst ongoing transformation programmes will continue, we have committed, until at least the beginning of July 2020, that no BT, Openreach, EE or Plusnet colleague will lose their job as a direct result of the changing trading conditions arising as a result of Covid-19. We have also introduced a 1.5% pay increase for non-managerial staff with effect from July as part of our annual pay reviews.”

In terms of broadcast revenue, one clear casualty has been BT Sport. Jansen wrote: “We are seeing lower revenue from our BT Sport propositions in Consumer, due to the impact of customer credits, pubs and clubs closures, and reduced advertising revenues. We will continue to offer bill credits while there isn’t live sport.”

BT’s consumer business, which includes BT Sport and its own TV operations, took a dip of 4% to £2.493 billion.