BT to allow external investors to fund fibre network
BT has opened the door to external investors funding an expansion of its fibre network for the first time after saying it would explore joint venture options over the coming months.
The UK telecoms company said that it would increase its fibre build to 25m homes by 2026, up from a previous target of 20m. It said however that it believes it can deliver better shareholder value by funding the additional 5m homes alongside third parties via a joint venture.
“BT comes out of this challenging year as a stronger business with an even greater sense of purpose,” said Philip Jansen, BT chief executive.
The company added that the new fibre expansion would create 7,000 jobs.
BT has been exploring ways to unlock the value of its Openreach network division over the past year as European telecoms companies look to tap into strong demand from infrastructure funds and private equity companies for network assets. BT said last year that it would spend £12bn on its plan to upgrade old copper networks to full fibre lines that offer faster speeds and more reliable service.
The plan has been contingent on a number of factors for BT which included a regulatory framework from Ofcom that provided certainty that new fibre lines would not be subject to onerous regulation in the short term. The government’s “super deductor” tax relief designed to stimulate investment was also a factor.
BT’s pension valuation was the last key stumbling block for the company as it plans its future investments. BT said on Thursday that the deficit had fallen to £8bn and unveiled a new funding plan for the scheme.
The company has also dealt with a 5G auction, a boardroom spat that led to the resignation of its chair and an attempt to sell or find partners for its sport arm in the past three months. It has also been threatened with industrial action by its main union although BT said on Thursday it had agreed a temporary truce this month.
BT said its revenue for the year to March fell 7 per cent to £21.3bn while pre-tax profit dropped 23 per cent to £1.8bn due to the impact of the Covid-19 pandemic on its consumer and business units.
It forecast revenue in the current year to be flat with adjusted earnings before interest, taxation, depreciation and amortisation between £7.5bn and £7.7bn, up from £7.4bn in the year to March.
Dividend payments, which were suspended last year, will resume at 7.7p.