BT scraps dividend, invests in fibre as rivals agree merger

LONDON: Britain’s biggest telecoms group BT suspended its dividend and said it would spend billions more on faster fibre broadband connections, as it prepares to meet the challenge posed by the merger of two of its biggest rivals.

Shares in the former monopoly fell as much as 12% to an 11-year low of 101.1 pence on Thursday, as investors reacted to losing their payout and the potential rise in competition.

BT said the saving from suspending its dividend until 2021/22 would see it through the expected financial crash caused by the coronavirus pandemic, which is leading to lower revenue from sports customers, reduced business activity and more cautious spending from multinational customers.

It will also help fund a 12 billion pound ($15 billion) plan to upgrade its legacy copper network to full fibre. If the conditions are right, BT said it could reach 20 million premises by the mid to late 2020s, 5 million more than it had targeted.