For the first time in a decade BT suspends its dividend to free up cash for investment in fibre to the premise (FTTP) broadband and 5G
BT Group has announced a large investment in broadband and 5G infrastructure, despite the problems caused by the Coronavirus pandemic.
The former UK incumbent said it would invest £12bn to deliver full fibre broadband (fibre to the premise or FTTP) to 20 million homes by the mid to late 2020s. BT had previously pledged to reach 15 million homes with FTPP by 2025.
But that additional investment comes at a price, after the carrier announced that for the first time in a decade it would suspend its dividend payments for shareholders until 2022.
BT’s announcement comes as the UK debates whether to ease the lockdown measures caused by the global Coronavirus pandemic, during which time BT’s networks performed well and were “comfortably within capacity”.
BT registered a £95m charge due to the virus, but overall BT’s results for the full year ending 31 March 2020 saw a marked decline. Net profit for the past year fell to £1.7bn from £2.2bn a year earlier.
There was also a slide in sales as annual revenues slid to £22.9bn from £23.4bn previously.
“Today we’re announcing the UK’s biggest communications infrastructure investment in a generation,” said chief executive Philip Jansen, who himself tested positive for Covid-19 in March.
“BT has risen to the challenge of the coronavirus crisis, keeping the nation and our NHS connected, standing by our customers and supporting the most vulnerable in our society,” said Jansen. “Recent weeks have shown how vital it is to develop next generation digital infrastructure.”
“That’s why we’ve set out a new target to invest around £12 billion to build full fibre broadband for 20 million premises right across the UK, including rural areas, by the mid- to late-2020s,” he said.
“Combined with our leadership in 5G, this is a sound long-term investment that will drive the UK’s economy for years to come,” he said.
The former UK incumbent has previously promised that there would be no job losses during the pandemic, but had warned Internet Service Providers (ISPs) that it would be scaling back the build out of fibre-to-the-premise (FTTP) and G.fast (tech to deliver speeds of up to 500 Mbps) during the national crisis.
Last month BT said the removal of Huawei equipment from EE’s ‘core mobile network’ would be delayed by two years.
BT now says that “100% of core mobile traffic” will be on its new Ericsson-built equipment by 2023.
But job losses are still on the cards long term for the 100,000 workforce, when Jansen unveiled a new five-year modernisation plan for the business, resulting in £2bn a year in savings.
“BT needs to be leaner, simpler and more agile,” Jansen was quoted by the Guardian newspaper as saying. “This initiative will re-engineer old and out-of-date processes, rationalise products, reduce re-work and switch off many legacy services. But in five years’ time will we end out with less people in BT, definitely.”
BT is also going to facing a bigger challenge after Virgin Media and mobile operator O2 announced they are going to merge and create a 50.50 joint venture.