BT vows to tackle dismal broadband speeds across UK

. . . but dividend under threat in blow to investors

BT’s new boss has vowed to plough billions into overhauling Britain’s creaking broadband network – but admitted that it could put the dividend at risk.

Philip Jansen said he wanted the telecoms giant to become a ‘national champion’ again and ramped up its targets for the rollout of ultrafast broadband.

This will see BT’s Openreach provide cutting-edge fibre optic connections to 4m homes and businesses by 2021, up from a previous goal of 3m, and to as many as 15m by the mid-2020s.

Jansen, who succeeded Gavin Patterson as chief executive earlier this year, said this could be achieved without cutting the dividend this year or culling further jobs. But in a blow to BT’s small army of private shareholders, he said this could change if the firm pursued his ambition to ‘invest heavily’ in network upgrades beyond 2020.

The 52-year-old said BT’s board would need to look at ‘all options’ to fund the project, including more spending cuts, borrowing money or cutting the dividend.

speaking as he revealed his first set of quarterly results, Jansen said: ‘We are seeing a once-in-ageneration technology shift. Nothing is standing still in this market, and I want to make sure that neither is BT.

‘We need to invest to stay ahead in our networks, and we need to invest to overhaul our business.’

His comments came as BT reported a 1pc drop in revenues to £23.4bn and a 2pc rise in profits to £2.7bn for the year to March 31.

The company said it had made £875m in annual savings so far, reducing its staff headcount by 4,000 out of a planned 13,000.

It is ploughing £3.8bn into major projects such as the fibre broadband rollout, with Openreach now connecting some 20,000 premises per week. However, Jansen has inherited a host of challenges from predecessor Patterson, who left at the end of January.

Under Patterson, BT was repeatedly criticised for poor customer service, slow broadband connections and for the billions of pounds it invested in sports television rights. It is also still grappling with the legal fallout of a £500m accounting scandal at its Italian business – for which it has set aside £55m in potential costs – and is locked in talks with regulator Ofcom about broadband pricing. Over the past five years the turmoil has caused shares to plunge by nearly 44pc to lows not seen since 2012.

Jansen, who will be able to earn up to £8.3m a year and was handed £895,000 worth of shares in a ‘golden hello’, said BT was ‘too bureaucratic’ and needed to undergo a radical overhaul to stay competitive. ‘While we are really wellpositioned in a very challenging and competitive UK market, we have a lot of work to do to ensure we remain successful,’ he said.

He also batted away suggestions BT would expand its sports offering, but stressed it would not be scaled back either. He added: ‘We feel very good about what we have currently got.’

The chief executive said the dividend would remain at 15.4p per share for last year and was also expected to remain the same for the current financial year. But he warned this might change when it came to deciding how to fund the rollout of fibre broadband to 15m homes and businesses.

‘If the board decides to go up to that level of build, clearly, we’re going to need some more money,’ he said. ‘You don’t lead to dividend automatically. We will have options, like all companies.’

Russ Mould, investment director at broker AJ Bell, said: ‘BT is still generating enough cash to fund its capital investment needs. However, the margin for error is getting smaller, and if profits do come under severe pressure the dividend could come under threat.’