BT Group PLC (LSE:BT.A) improved its dividend policy and reiterated targets for sharply higher cash generation over the next four years as the telecoms group said cost savings and lower capital spending would drive stronger shareholder returns.
The telecoms group reported adjusted revenue of £19.6 billion for the 2026 financial year, down 4% versus the previous year and just short of the average City analyst forecast of £19.68 billion.
Weakness in its international division and continued declines in traditional voice services offset solid fibre broadband growth.
Adjusted EBITDA was flat at £8.2 billion, in line with expectations, while reported pre-tax profit increased 8% to £1.4 billion.
Infrastructure arm Openreach's fibre connections rose 2.2 million to 8.8 million, taking take-up to more than 38%.
Broadband customer losses were also slightly better than expected, with line losses totalling 825,000 for the year against guidance of around 850,000.
Normalised free cash flow fell 6% to £1.5 billion, in line with consensus forecasts, despite higher capital expenditure of £5.1 billion.
Chief executive Allison Kirkby said the group was “transforming ahead of plan” and reiterated guidance for normalised free cash flow to rise to about £2 billion in the 2027 financial year, with adjusted EBITDA growth flat or slightly higher at £8.2-8.3 billion.
BT increased its full-year dividend by 2% to 8.32p per share, slightly short of the forecast of 8.36p.
Under the new policy, the company said dividends will increase by low to mid single-digit percentages annually from the 2027 financial year until leverage metrics consistent with a BBB+ credit rating are achieved.
BT added that surplus cash flow after that point could be returned to shareholders through enhanced distributions.
Guidance was reiterated for normalised free cash flow to rise to around £3 billion by the end of the decade, helped by annual capital expenditure falling by more than £1 billion from 2026 levels.