BT Group increases its dividend despite losing almost half a million broadband customers

BT Group has increased its annual dividend despite experiencing a significant decline in broadband customers.

The telecommunications giant lost 491,000 Openreach customers in the 12 months to March amid slower-than-expected growth in the broader broadband market.

However, it plans to give investors a final dividend of 5.69 pence per share, taking its annual payout a further 4 per cent to 8 pence, thanks to better-than-expected free cash flow.

And Allison Kirkby, the company’s chief executive, said the payments were possible because BT expects future cash flow to expand significantly.

He said the company had reached a “turning point” in its long-term strategy after achieving its £3bn cost reduction plan a year early and surpassing peak capital investment in its broadband rollout. fiber.

As a result, BT now forecasts normalized free cash flow to rise from around £1.5bn this year to £3bn by the end of this decade.

BT Group Shares it soared 8.7 per cent to 122.7p on Thursday morning, making it the best-performing FTSE 100 shares, although it has still fallen by around a quarter in the last 12 months.

Kirkby said: ‘As we move into 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 business.

“This will create a simpler BT Group, fully focused on connecting the UK and well positioned to deliver significant growth for all our stakeholders.”

For the current year, it forecasts adjusted revenue and earnings before unpleasantness will see modest growth at best.

BT also plans to cut capital spending to around £4.8 billion, having already reduced it by 3 per cent last year even as its fiber-to-the-premise footprint grew to more than 14 million premises. .

Group turnover rose 1 per cent to £20.8bn in fiscal 2024, due in part to price increases and increased sales of fiber products by Openreach.

However, pre-tax profits more than halved to £855m, largely due to a £488m goodwill impairment in its trading operation.

Mark Crouch, analyst at eToro, said: “The biggest problem facing BT is the fiercely competitive market in which it operates.

‘Broadband providers are seeking to undercut their rivals, forcing prices down, which in turn has increased pressure on BT’s margins. With hungry competitors ready to gobble up disgruntled customers, BT will have to work even harder to retain them.’