BT reveals it will ramp up fibre broadband roll-out to serve 25 million homes thanks to a tax break as it reports a hefty slide in profit
BT has said it plans to ramp up its fibre broadband rollout by 5million homes to serve a total of 25million by December 2026.
The telecoms giant said it will fund the increased deployment using part of a Government tax deduction announced in March that it is receiving.
The recent Wholesale Fixed Telecoms Market Review by Ofcom will also help it to ‘increase and accelerate’ the roll-out, the company said.
BT boss Philip Jansen is steering the ship as the company tries to ramp up its fibre broadband deployment
Chief executive Philip Jansen said: ‘Today we are increasing and accelerating our FTTP (Fibre to the Premises) target from 20million to 25million homes and businesses by December 2026 to deliver further value to our shareholders and support the Government’s full fibre ambitions.’
The update came as BT reported a large dip in profits. Between April 2020 and March profit dipped by 23% to £1.8 billion, the firm revealed.
This was largely because of falling revenue, which was down 7% to £21.3 billion thanks in part to the impact of the coronavirus pandemic on the business’s consumer and enterprise divisions.
Investment in fibre and a bonus for frontline staff also ate into profits, BT said.
‘BT comes out of this challenging year as a stronger business with an even greater sense of purpose,’ Mr Jansen said.
‘After a number of years of tough work, and as we look to build back better from the pandemic, we’re now pivoting to consistent and predictable growth.
‘We are building a better BT for our customers, for the country, for our shareholders and for those who work for this great company – now and in the future.’
The business said it plans to bring back its dividend, which was suspended due to Covid, during this financial year. The payout is expected to reach 7.7p per share.
Keith Bowman, equity analyst at Interactive Investor, commented: ‘BT is trumpeting a tough but transitional year with these full-year results. Greater certainty following developments including regulatory clarity and the government’s new tax related investment incentive, are enabling BT to increase and accelerate its total Fibre-to-the-Premises (FTTP) build from 20 million to 25 million homes by December 2026. An increase from this year’s 2 million build towards an annual 4 million will start immediately.
‘News of its assessment of a potential joint venture for an additional 5 million builds offers further momentum, while a plan to repair its staff pension plan deficit improves shareholder clarity.
‘In all, BT’s previous decision to halt and then rebase the dividend was a difficult one for income investors to swallow, Bowman continued. ‘But the prioritisation of investment over dividend payments is likely the sensible decision. Recent service price increases are not to be forgotten and the dividend payment is due to restart, albeit at half of the previous level.
‘For now, and while clear assessment continues to be blurred by Covid, a growing fibre business and an undemanding valuation leave analyst consensus opinion currently pointing towards a ‘buy’.
Ben Barringer, equity research analyst at Quilter Cheviot added: ‘BT’s results are largely in line with expectations with revenues and profits falling on consumer demand and a well-intentioned bonus to staff for their work during the pandemic. However, while it has performed well in the short-term, uncertainty remains for a business that is complicated and where inefficiencies remain.’
‘The business continues to focus on its rollout of fibre broadband, and this is going to be crucial watching going forward. While it has increased its target to reach 25m homes with fibre broadband, this comes with increasing costs and capex spending, ultimately impacting revenues in the meantime.’