The new pension deficit reduction plan keeps the group on course to wipe out the shortfall by 2030 and appears to have freed up cash to step up the fibre to the premises rollout
() is to crank up the rate at which it is building “fibre to the premises” (FTTP) broadband connections.
Its independent Openreach subsidiary now believes it has the capability to reach around 4mln premises a year, as a result of which it has increased its FTTP commitment to build 25mln premises by the end of 2026, up from 20mln previously.
BT said it has the capacity to fund this additional build entirely from internal resources while continuing to stand by its other priorities, including investing in 5G and its modernisation programme, committing to a minimum credit rating of BBB flat, supporting the BT Pension Scheme and reinstating its dividend in the current financial year at 7.7 pence per share.
The telecoms giant said it thinks it could deliver further shareholder value by funding the additional 5m premises through a joint venture with external parties and will explore joint venture structures over the first half of the current financial year.
“BT is already building more full-fibre broadband to homes and businesses than anyone else in the UK. Today we are increasing our FTTP target from 20 million to 25 million homes and businesses to deliver further value to our shareholders and support the Government’s full-fibre ambitions,” said Philip Jansen, the chief executive of BT Group.
“This has three massive benefits: it allows us to go faster, beefing up our capacity to build fibre to households and businesses; it allows us to go further, getting fibre to more people including in rural communities, and; it will help fuel UK economic recovery, with better connectivity and up to 7,000 new jobs,” he added.
On the subject of pensions, the group announced its triennial pension valuation agreed with the BT Pension Scheme (BTPS).
The funding deficit, as at the end of June 2020, was £7.98bn, which BT intends to repair with a two-pronged attack; the first element is to whittle away £2bn of the deficit through an asset-backed funding arrangement over 13 years with annual cash payments of £180mln a year, secured against BT’s EE business while the second will see the balance met over the existing 10-year period with annual cash contributions reducing from £900mln initially down to £600mln from 1 July 2024.
Simon Lowth, BT’s chief financial officer, said the agreement was “a good outcome for BT and for all members of the BTPS with reduced risk for both sides”.
“This agreement keeps us on track for zero funding deficit by 2030, whilst ensuring we have the financial capacity to drive our value-enhancing investment opportunities, including in our FTTP and 5G rollouts and modernisation programme,” he added.
Otto Thoreson, the chairman of the BTPS…