May 7, 2020
BT suspends dividend and signals future cuts
BT will not pay a dividend for the first time since the start of the millennium and warned shareholders to brace for lower payouts in the future as the UK telecoms group focuses on improving its broadband network and safeguarding its credit rating. Payouts are expected to resume in the next financial year but at just 7.7p a share, far below the last final dividend BT paid of 15.4p. In response, the group's shares fell 10 per cent in early trading before rebounding slightly. Philip Jansen, BT's chief executive, called it "Hard for shareholders although necessary", explaining that cancelling the dividend would save the company £2.5bn. Jan du Plessis, BT chairman, said the company was "Ready" to build out its full fibre network to 20m premises by the end of this year, but that cutting the dividend was needed to navigate "The unprecedented uncertainties caused by Covid-19 without compromising our credit rating". BT is one of the largest dividend payers in the FTSE 100 and last passed on making a payout in 2001-02. Analysts at Jefferies called the decision to temporarily remove the dividend "Unexpected", while counterparts at Citi said it was a "Tough but sensible dividend decision" considering the £12bn the company had said it needed to build up the UK's fibre network.
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