BT lays out new dividend aims as profit climbs despite lower revenue

(Alliance News) - BT Group PLC on Thursday raised its dividend and set out a new payout policy as it reported higher full-year profit.

The London-based telecommunications company said pretax profit rose 7.6% to GBP1.44 billion in the year to March 31 from GBP1.05 billion a year prior, boosted by "lower depreciation and amortisation".

Revenue edged down 3.5% to GBP19.65 billion from GBP20.36 billion, just shy of GBP19.68 billion company compiled consensus, driven by lower International revenue, declines in handset trading and declines in adjusted UK service revenue.

Adjusted UK service revenue fell 0.8% to GBP15.45 billion from GBP15.57 billion, but beat GBP15.38 billion consensus, driven by lower voice volumes in Business and Consumer, offset by CPI-linked price increases and an improved broadband first-to-the-post mix in Openreach.

Openreach broadband line losses were 203,000 in the fourth quarter, giving full year losses of 825,000, slightly better than 850,000 guidance, and expects losses of around 800,000 in financial 2027.

BT reported record FTTP build of 4.8 million premises passed in the year, and record customer demand for Openreach FTTP with 2.2 million net adds in the year.

Chief Executive Allison Kirkby said: "Our record-breaking Openreach full fibre build hit its upgraded target and today reaches more than two thirds of UK homes and businesses, keeping us well on track for our 25 million milestone by the end of December."

Shares in BT were down 0.7% at 229.18 pence each in London on Thursday but are up 25% year-to-date and 35% in the last 12 months.

BT raised its final dividend by 1.9% to 5.87 pence per share from 5.76p, taking its total payout 2.0% higher to 8.32p from 8.16p, in line with consensus.

It will now look to grow the dividend by low to mid single digits per year from financial 2027 onwards, until "metrics consistent with a BBB+ credit rating are reached".

After that, it said "residual cash flow will be available for enhanced distributions to shareholders".

BT said it has extended its transformation plan by another year to financial 2030, upping the sum it is looking to save to GBP3.7 billion from GBP3.0 billion.

For financial 2027, it expects adjusted earnings before interest, tax, depreciation and amortisation in the range of GBP8.2 billion to GBP8.3 billion.

In the year just gone, it had risen to GBP8.23 billion from GBP8.21 billion, compared to GBP8.21 billion consensus.

BT expects adjusted revenue of GBP19.0 billion to GBP19.5 billion and adjusted UK service revenue of GBP15.1 billion and GBP15.4 billion in financial 2027.

Capital expenditure, excluding spectrum, is expected to be around GBP4.3 billion in financial 2027, which would be down from GBP5.11 billion in the financial year just ended.

The firm expects free cash flow of GBP2.0 billion in financial 2027 and GBP3.0 billion by the end of the decade. In the financial year just ended, free cash flow nudged down to GBP1.51 billion from GBP1.60 billion.

Separately, the firm said Patricia Cobian will succeed Simon Lowth as finance chief on September 1. The appointment was announced last July.

By Jeremy Cutler, Alliance News reporter

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