Britain’s biggest telecom BT Group PLC has suspended its dividend, one of the biggest on the London Stock Exchange, until the 2021-2022 fiscal year and pulled its financial outlook in response to the COVID-19 pandemic.
The company said that the cash saving would bolster it through the expected financial crash that would lead to lower revenue from sports customers, reduced business activity and more cautious spending by multinational customers.
On the same day that rivals Telefonica SA and Liberty Global PLC announced the merger of their British units to build a stronger challenger, BT also set out plans for a new five-year program to modernize the business.
Photo: Reuters
The new program would cost ￡1.3 billion (US$1.61 billion) to achieve and would deliver annualized gross benefits of ￡2 billion by March 2025 as it switches off many legacy programs and uses new technologies to improve.
“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,” CEO Philip Jansen said. “Due to COVID-19, BT is not providing guidance for 2020-2021 at this time.”
It said it expected to resume dividend payments at ￡0.077 per share. In the 2018-2019 fiscal period it paid a full-year dividend of ￡0.154.
Jansen has been tasked with building nationwide gigabit fixed and mobile networks, while trying to shore up revenue and earnings in the short term.
The company yesterday said that it was working to build its fiber to the home network to 20 million premises by mid to late this year, on the assumption that it secures the right regulatory approval.
It said its 2019-2020 fiscal year results were in line with expectations.
In other news, Telefonica and Liberty Global yesterday announced that their British units — Internet supplier Virgin Media Inc and mobile phone carrier O2 — plan to merge and create a big new telecom provider in the UK.
The parent companies valued the new company at ￡31 billion.
Telefonica CEO Jose Maria Alvarez-Pallete said that “combining O2’s No. 1 mobile business with Virgin Media’s superfast broadband network and entertainment services will be a game-changer in the UK.”
O2 is the UK’s largest mobile phone company with about 34 million users. Virgin has more than 5 million subscribers to its broadband and cable television services.
Additional reporting by AP
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