Favourable funding conditions help BT up 5G target by 5 million homes

Telecoms operator to connect 25 million households by 2026, creating up to 7,000 jobs

Philip Jansen, chief executive of BT, said the company is now 'pivoting to consistent and predictable growth'. Getty Images

BT is speeding its full-fibre broadband programme and adding five million extra households with the project funded by potential joint ventures as well as tax relief.

The chief executive of the telecoms operator, Philip Jansen, said the acceleration of its 5G programme would now see 25 million homes connected by December 2026 creating up to 7,000 jobs in the process.

Mr Jansen said the £15 billion ($21.07bn) programme would see the company “building at a huge rate in the future”, going from the current 43,000 homes a week to 75,000 a week – equivalent to 15,000 a day.

“The good news is, we can fund it all ourselves,” Mr Jansen told the BBC.

“We might look at some other options, if that's viable, and in the interest of our shareholders. But the great news is with some very, very supportive policy changes on the tax front from the government, most notably, what's known as the super deduction, we've decided to accelerate our build even further.”

The news came as BT said its revenue for the year to March dropped 7 per cent to £21.3bn, while pre-tax profit fell £23bn to £1.8bn because of the hit on its consumer and business units from the Covid-19 pandemic.

While the company expects revenue in the current year to remain flat, dividend payments that were suspended last year due to the crisis will resume at 7.7 pence.

"After a number of years of tough work and as we look to build back better from the pandemic, we're now pivoting to consistent and predictable growth," Mr Jansen said.

“The wholesale fixed telecoms market review, 5G spectrum auction and the government’s super-deduction tax give us the green light to build the UK’s next generation digital infrastructure even faster.”

As well as the government’s super-deduction tax relief, designed to stimulate investment, a new agreement on the company's pension payments also played a role in BT's accelerated 5G expansion.

BT’s pension valuation was a key challenge for the company as it planned future investments but on Thursday the company said the deficit had fallen to £7.8bn, nearly £2bn lower than market expectations, and it unveiled a new funding plan for the scheme.

“The latest valuation of the pension reveals a massive deficit which will require hundreds of millions of pounds worth of funding every year," said Russ Mould, investment director at AJ Bell.

“The company’s net debt pile is also pretty eye-watering, and the surprise isn’t really that dividends remain off the table for now but that they are likely to come back in the current financial year. The UK’s new super deduction tax on capital expenditure is clearly doing a lot of the heavy lifting here."

The FTSE-100 company said it would pursue a joint venture in Openreach, the network’s infrastructure arm that became a separate entity in 2018 over competition concerns, with “external parties” in the first half of this fiscal year to help fund the accelerated extension of its programme.

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