BT to invest in fibre and 4G, promises at least 10% dividend growth

BT CEO on the rollout of ultrafast broadband
Our priority is paying off debt: BT CEO

BT reported a 6 percent rise in full-year revenue on Thursday to £18.91 billion ($27.46 billion), including the acquisition of mobile operator EE, and up 2 percent on an underlying basis.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 5 percent including the EE acquisition, to £6.58 billion, and up 1 percent on an underlying basis. Shares in the group rose over 3 percent in opening trade.

The company's full-year proposed dividend rose 13 percent to 14.0 pence per share.

BT Chief Executive Gavin Patterson told CNBC that the company's priority was to pay down its net debt (of £9.8 billion as of March 31, up £4.82 billion primarily due to the acquisition of EE) but said that it could at the same time offer investors an increased dividend.

"Today we're guiding that over the next two years our dividend will increase by a minimum of ten percent in each of the next two fiscals (years)," he said, adding that the company was balancing investment with paring down debt.

"It is one of the challenges we have as a business – balancing the needs of shareholders who want more dividend, we want to invest in the future to ensure that the infrastructure keeps the U.K. at the head of the charge, look after that pension to make sure that deficit doesn't become unmanageable so it is a balancing act."

Earlier in the year, Britain's competition authorities cleared BT's £12.5 billion acquisition of EE, saying it would not substantially lessen competition in the broadband, fixed and mobile markets.

Jason Alden/Bloomberg via Getty Images

In February, BT was ordered by the U.K.'s communications watchdog Ofcom to open its cable network Openreach to rivals in order to boost competition.

Openreach is a subsidiary of the company that owns the cables connecting people to the internet and other telecoms operators and broadband providers like Sky will soon be able to access that infrastructure.

BT said in its earnings statement on Thursday that it plans to invest £6 billion in infrastructure to ensure that "both fibre and 4G reach 95 percent of the U.K."

Gavin Patterson, chief executive of BT, told CNBC that there was generally a high level of customer satisfaction with BT's rollout of its fibre-optic cable network despite some rural communities complaining that their coverage is still not connected.

"A lot of people are very happy with it, I'm not saying that there aren't things that we could better but we've rolled out fibre to over 25 million homes and businesses across the U.K. The take-up is 23 percent, that's the highest coverage and highest take-up in Europe. There are some people that we haven't got to yet, we will fill those in over the next couple of years but clearly it's a product that people want."

Patterson told CNBC that the center of gravity of the company was moving away from a reliance on Openreach for much of its profits.

"We're becoming less dependent on Openreach to drive the profits for the group as a whole and with EE, 60 percent of our profits are in the unregulated downstream part of BT in the U.K. now."

The company said in its earning statement that it had invested across the business and was seeing good results.

"Our BT Sport audiences are up 45 percent this year following the launch of UEFA Champions League and UEFA Europa League content. BT Mobile has done well since its launch, building a customer base of over 400,000. And in the business market, we've seen very strong demand for our cyber security expertise with our security business growing by 24 percent."

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