Cable ties

10 May 2018 By Liam Proud Follow @liamwardproud

In recent months the telecom group has been sorting out its flawed strategy. It’s now cutting a bloated workforce, investing in superfast broadband and shunning expensive TV sports rights. Yet neither revenue nor dividends are likely to grow in the near future.

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BT on May 10 announced a 1.5 billion pound cost-cutting plan that includes 13,000 job cuts for back-office and management staff, and exiting central London headquarters.

The British telecom incumbent said revenue for the 12 months ending in March 2019 would be 2 percent lower than the 23.7 billion pounds it generated in the financial year just completed. EBITDA will be 7.3 billion pounds to 7.4 billion pounds next year - lower than analysts’ previous forecasts of around 7.5 billion pounds.

Chief Executive Gavin Patterson said on a call with journalists that the cost-cutting programme, which will cost about 800 million pounds, will give it room to invest in superfast full-fibre broadband networks and keep dividend payouts flat. Analysts had expected dividends to rise in the next two financial years.

BT’s capital expenditure will rise to around 3.7 billion pounds in the next two financial years from about 3.3 billion pounds in the financial year just completed.

The company also announced a new agreement with pension trustees that will see it make payments totalling 2.1 billion pounds by March 2020. Analysts had expected payments of almost 2.4 billion pounds.

BT shares were down 7.7 percent to 220 pence at 0720 GMT.

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