BT suspends dividends to focus on 5G and money-saving modernisation program
A UK telecommunications company has announced that it will be suspending its dividends for the year in order to invest in 5G and FTTP (Fibre-To-The-Premises).
BT, headquartered in London, has said that it will be investing in 5G and FTTP, as well as a 5-year modernisation program, and that as a result it will be suspending its dividend payments until 2022.
This is the first time that the company has suspended its dividends in more than a decade.
The company has said that its 5-year modernisation program will deliver savings of more than £2bn in the next half decade.
Philip Jansen, chief executive of BT, commented: “BT had a positive year delivering results in line with expectations and completing our £1.6bn phase 1 transformation programme, one year ahead of schedule.
“COVID-19 has changed everybody’s world and I am immensely proud of how BT has responded to the challenges the COVID-19 crisis has presented.
“Of course, COVID-19 is affecting our business, but the full impact will only become clearer as the economic consequences unfold over the next 12 months.
“Due to COVID-19, BT is not providing guidance for 2020/21, at this time.
“Today we are announcing a rapid acceleration of our FTTP (Fibre-To-The-Premises) build with a target of 20 million premises passed by the mid- to late-2020s, including a significant build in rural areas.
“After passing 1.3 million premises last year, we are aiming at over 2 million in 2020/21, and envisage a maximum build rate of 3 million premises per year.
“Our FTTP investment should deliver pre-tax nominal returns of between 10 per cent to 12 per cent and is based on a regulatory framework consistent with Ofcom’s preferred policy direction and continued support for infrastructure investment and competition.
“BT is delivering, but is also changing. BT needs to be leaner, simpler and more agile.
“Today we are announcing a radical modernisation and simplification programme that will use technology to create a better BT for the future.
“This 5-year initiative will re-engineer old and out of date processes, rationalise products, reduce re-work and switch off many legacy services.
“This next stage in the modernisation of BT will deliver gross annualised savings of £2 billion over the next 5 years.
“In order to deal with the potential consequences of COVID-19, allow us to invest in FTTP and 5G, and to fund the major 5-year modernisation programme, we have also taken the difficult decision to suspend the dividend until 2022 and re-base thereafter.
“These decisions, particularly on the dividend, network investment and transformation are key to underpinning BT’s investment case; driving network strength, competitive strength and financial strength, providing more clarity to the market, and driving long-term value for shareholders.
“I am confident that these decisions position us really positively for the future.”
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