BT to cut another £3bn of costs

Unlock the Editor’s Digest for free

BT has said it will cut another £3bn of costs and announced an increase in its dividend, as new chief executive Allison Kirkby laid out her plans to turn around the UK telecoms group.

Kirkby said on Thursday that the FTSE 100 company had hit an original £3bn target for gross annualised cost savings a year ahead of schedule, while announcing a new target of the same size to be reached by the end of its 2029 financial year.

The company’s reported operating costs were £18.6bn in the year to March 31. It did not provide details of where the new savings would come from.

The news pushed BT shares up 8 per cent in early trading to 122p

Kirkby said BT had “reached the inflection point on our long-term strategy” and would create a “simpler” group as she also said it was “exploring options to optimise our global business”.

The comments came as the telecoms operator reported results for the year to March. BT declared a final dividend of 5.69 pence a share, bringing the full year dividend to 8 pence, up from 7.7 pence last year.

Kirkby, who took over in February, added that the telecoms group had passed peak capital expenditure on its rollout of full fibre broadband across the country which, along with greater efficiency, gave it “the confidence to provide new guidance for significantly increased short-term cash flow and sets out a path to more than double our normalised free cash flow over the next five years”.

BT expects to reach normalised free cash flow of about £1.5bn in its 2025 financial year, up from £1.3bn in the year just ended, and about £3bn by the end of the decade. It expects adjusted revenue growth of between zero and 1 per cent in the current year and earnings before interest, taxes, depreciation and amortisation of £8.2bn, up from £8.1bn in the year just ended.

The company added it could face further broadband losses to competitors, after posting line losses of 491,000 in 2024, if the market remained weak.

BT’s business division, which was created from a merger of its global and enterprise units in 2022, reported a decline in annual adjusted revenue and ebitda. The company has taken a £488mn goodwill impairment charge on the operation, “reflecting a decline in profitability in recent years”.