BT pledges pumped-up shareholder payouts as it eyes options for global unit | City & Business | Finance

BT’s new chief executive Allison Kirkby says she could sell its global business telecoms division in order to focus on its core UK operations.

Speaking at its annual results, Kirkby said that BT is exploring options to “optimise” its global business unit, which serves customers in 180 countries, providing network, security and cloud services.

Additionally, she said that as spending on building its Openreach division’s full fibre to the premises broadband network is past its peak and that its cost cutting and reorganisation plan is a year ahead of schedule, it has the financial firepower to increase its dividend payouts.

She told analysts that she will put together a team to look at options for its global business division, which produces approximately £2.5billion in revenues and profits of £500million. These include “interesting partnerships” to accelerate the rollout of its Global Fabric network-as a-service, as well as disposals.

She added: “We see that segment as ripe for consolidation, and we’re ready to engage in the consolidation opportunities that can occur from that.”

For the 12 months to the end of March, BT made a pre-tax profit of £1.2billion, down 31%, on revenues of £20.8billion, which were just 1% higher than those it produced for the prior year. BT’s profits dropped primarily due to write offs, falling asset values and pension costs.

However, Kirkby noted that its free cash flow – the money it has left over after paying for all its expenses and investments – was a better than expected £1.3billion. She expects this to double over the next five years and as a result, she lifted BT’s final dividend 5.6% to 5.7p per share, a payout worth approximately £560million to shareholders.

Kirkby hinted that BT’s dividend payouts will rise further because as we get to the latter part of this decade, “there will be some significant cash flow for us to allocate”.

Victoria Scholar, Interactive Investor’s head of investment, said: “Kirkby appears to be trying to win over shareholders, attempting to boost its struggling share price with a better-than-expected free cash flow performance, a focus on cost savings, and by increasing the dividend payout.”

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