BT set to reveal falling profits but rosy broadband future

BT is set to reveal a fall in profits for 2020 as bosses unveil its full-year results on Thursday despite shares rising 40% in the past 12 months.

The fall is expected to be due to fierce competition during Covid, asset sales and declining revenues from legacy products such as landline phones.

But investors could send the share price even higher if chief executive Philip Jansen gives some clues on when the dividend could be reinstated.

He has already told the market not to expect anything this year, whilst last year’s was also scrapped. But analysts will be hoping for signs that 2022 could be the year for some returns.

Russ Mould, of AJ Bell, said: “The CEO has said he expects BT to return to the dividend list in its new financial year so analysts and investors will be watching for any clues on what sort of distribution they can expect. The current consensus analysts’ forecast is looking for around 7p per share.”

Mr Jansen can also expect to face questions over the future of BT Sport, as the company recently announced plans to sell off a stake in the business.

There could also be the unveiling of a new chairman – with former Kingfisher chief executive Sir Ian Cheshire hotly tipped – after the former chair, Jan du Plessis, suddenly quit with BT insisting rumours of a bust-up were unfounded.

Plans around the future of BT’s full fibre broadband rollout will also come under scrutiny, with the results coming two months after regulator Ofcom laid out its requirements for the £12 billion investment to start.

The telecoms giant said it aims to offer full-fibre broadband to 20 million homes in the UK no later than the end of the decade.

BT said at the time the decision around how much it could charge for certain services meant the rollout could start at pace.

Mr Mould added: “Funding its liabilities, its capital investment programme and bidding for sports rights looks to be proving too much in the final admission that the strategy outlined by Mr Jansen’s predecessor, Gavin Patterson, has failed: his 10% dividend growth target is long gone, Mr Patterson himself is long gone and the dividend is long gone, having been cut to zero a year ago.”

Underlying pre-tax profits are forecast to hit between £7.3 billion and £7.5 billion, down from £7.9 billion a year ago.