BT Group’s profit after tax plummeted 55 per cent after the British telecoms firm wrote down a significant chunk of its business, wiping £488m off the company’s value.
While revenue for the group remained stable, at £20.8bn compared to £20.7bn in the year before, profit before tax fell 31 per cent.
In BT Group’s full-year results to 31 March, it included a significant non-cash impairment of goodwill due to a “decline in profitability in recent years”, which, along with increased depreciation, amortisation and pension interest expense, pushed down profit.
The writedown, BT said, “(reflected) a decline in profitability in recent years.”
Capital expenditure for the group fell three per cent to £4.9bn, due to reduced costs in BT’s push for to connect fibre optic directly to homes, with the programme adding a record 78,000 new customers a week to its network.
The group reported strong Openreach customer demand for fibre optic, with net adds of 397,000 in the last quarter, and total premises connected now over 4.8 million.
BT’s share price is down almost 25 per cent in the past year as the cost of building new fibre and 5G networks has continued to drag on the business.
The firm is a current favourite of telco short-sellers.
The company is aiming to switch off its traditional telephone network by 2025, instead shifting to digital and focusing on building 5G networks across the nation.
BT chief executive Allison Kirkby said: “Having passed peak capex on our full fibre broadband rollout and achieved our £3bn cost and service transformation programme a year ahead of schedule, we’ve now reached the inflection point on our long-term strategy.”
Due to these measures, BT has now upgraded its short term clash flow expectations, which will see the company plan to double its normalised free cash flow over the next five years, with a further £3bn of yearly cost savings to be reached in that time.
Kirky noted that the company had also increased its dividend for the year by 3.9 per cent, bumping it up to eight pence per share.
“As we move into the next phase of BT Group’s transformation, we are sharpening our focus to be better for our customers and the country, by accelerating the modernisation of our operations, and by exploring options to optimise our global business,” the CEO added. “This will create a simpler BT Group, fully focused on connecting the UK, and well positioned to generate significant growth for all our stakeholders.”