BT’s new boss Philip Jansen kept the phone company’s dividend in the face of declining profits while committing to the turnaround begun by his predecessor.
Mr Jansen said earnings would fall this year and BT needed to be “more competitive” as he laid out plans to accelerate a fibre network rollout. The dividend pledge was a relief for investors as the former monopoly faces enforced price caps, fierce competition for broadband customers and a large pension deficit.
The former Worldpay executive avoided major strategic shifts in his first results since taking over from Gavin Patterson on February 1st. Mr Patterson, a friend and former colleague of Mr Jansen, began cutting thousands of jobs last year after contract losses, an accounting scandal and run-ins with regulators. BT’s shares have lost half of their value in three years.
The cuts are set to free up cash for network spending. Mr Jansen said BT aimed to upgrade 4 million premises with fibre connections by March 2021, up from a previous goal of 3 million, responding to government pressure to improve internet speeds. It aims to reach 15 million premises by the mid-2020s, 5 million more than its previous target.
“BT needs to be there to provide the digital infrastructure for the future,” Jansen told reporters on a call, citing demand for artificial intelligence, machine learning and quantum computing. Addressing analysts later, he said BT had to “massively simplify our processes” and increase the use of robotics and automation.
With revenue declining across the entire business except BT’s consumer division, the company had already flagged the profit drop in the year to next March. BT said it expects annual adjusted earnings before interest, tax, depreciation and amortization of £7.20 billion ($9.4 billion) to £7.30 billion. That’s lower than the £7.36 billion average of analyst forecasts compiled by Bloomberg. – Bloomberg
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