8th May 2014 08:17
LONDON (Alliance News) - BT Group PLC Thursday raised its total dividend for the year to end-March, after it beat expectations for pretax profit and revenue, and promised further dividend growth over the next two years.
The telecommunications company raised its total annual dividend to 10.9 pence from 9.5 pence
BT posted pretax profit of GBP2.31 billion, broadly flat on the year before, as revenue rose to GBP18.29 billion from GBP18.10 billion. Profit was damped by restructuring charges of GBP276 million and a GBP450 million investment in the new BT Sport service.
The company said expects to posted further restructuring costs of around GBP200 million in the new financial year.
Excluding exceptional costs including the restructuring charges, pretax profit rose to GBP2.81 billion from GBP2.66 billion.
Analysts were expecting BT to post a pretax profit before items of GBP2.21 billion on revenue of GBP18.25 billion, according to consensus expectations provided by the company.
BT forecast underlying revenue, excluding transit, for the current financial year to be broadly level with the 2013/14 financial year, despite expecting to lose around GBP100 million in UK local government revenues. BT maintained its forecast of adjusted earnings before interest, tax, depreciation and amortisations of GBP6.2 billion to GBP6.3 billion during the new financial year.
It expects normalised free cash flow for the current financial year to be above GBP2.6 billion, with cash flow growth to continue into the 2015/16 financial year.
The company also extended its expectations of 10% to 15% dividend growth and share buybacks of around GBP300 million per year over the next two years to 2015/16.
BT said that its fibre roll out has now passed more than 19 million premises, around two thirds of the UK, and it is making good progress with extending this roll-out further with its Broadband Delivery UK contracts now in the build phase. BDUK is a UK government-back programme to expand broadband provision to rural areas.
During the year Openreach added 1.3 million net fibre additions, up 45% over the previous year. It added 869,000 retail fibre broadband customers during the year. BT Chief Executive Officer Gavin Patterson said in a television interview Thursday morning that BT is growing faster than British Sky Broadcasting Group PLC in the UK broadband market.
The company split its BT Retail division into two new divisions - BT Business and BT Consumer - during the fourth quarter, which it said has allowed it to better serve its small- and medium-sized enterprise and consumer customers. BT Consumer revenue rose 9% during the fourth quarter, driven by the newly launched BT Sport service and strong growth in broadband services.
The BT Sport service, which it launched last August after it won the rights to show some English Premier League matches, has now been taken up in five million homes, BT said.
BT Global services revenue was down 2%, hit by the strengthening of sterling and lower transit revenue. Strong growth in Asia Pacific, Latin America, Turkey, the Middle East and Africa offset declines in the UK.
In BT Wholesale revenue declined 7% during the year, hit by the loss of BT's contract with the Post Office, and lower fixed termination rates enforced by UK telecoms regulator Ofcom following its Narrowband Market Review.
In Openreach, revenue dropped 1% during the year, hit by regulatory price changes, although this was mostly offset by growth in fibre broadband revenue and Ethernet revenue.
Shares in BT were trading up 2.5% at 386.10 pence Thursday morning, making them the second highest gainer on the FTSE 100 after Barclays PLC.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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