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Shares in BT (BT-A.L) surged as much as 6% on Thursday after it reinstated its dividend payments and updated its cost-savings target.
The telecommunications company said it would achieve an additional £2bn ($2.7bn) of cost savings by the end of the financial year in 2024, a year ahead of schedule, while announcing that it will pay a 2.31p per share dividend after suspending payments last year.
Its cost-cutting plan, launched in 2018, has already hit an initial £1bn of savings 18 months before expected, BT added.
The group, which recently was the subject of a possible takeover bid from its largest shareholder Patrick Drahi, revealed that it also trimmed its spending outlook in the year to 2023, down by £20m to £4.8bn.
In the six months to the end of September it saw a 3% drop in revenue to £10.3bn, amid weak performance in its business connectivity arm and global IT services operation, while pre-tax profit dropped 5% to £1bn.
“These results demonstrate an acceleration of pace in the transformation of BT,” chief executive Philip Jansen said.
“We are creating a better BT for our customers, the country and our shareholders. We're going further and faster on the UK's next generation connectivity; we're modernising BT and bringing down costs.”
It comes as BT is set to spend £15bn upgrading its national network to fully fibre-optic lines. It said Openreach had now rolled out full fibre broadband to almost 6 million premises with its three largest customers signed up to the new pricing offer.
BT signed 10 communication providers who use Openreach, including Sky and TalkTalk, to its Equinox long-term full fibre pricing plan.
The firm’s 5G network also covers more than 40% of the UK's population with more than 5.2 million 5G ready customers.
BT axed plans to bring in an outside investor to bolster its superfast broadband upgrade as strong demand allowed it to invest all the money itself. The move to upgrade 25 million homes and businesses to full-fibre by 2026 would now be solely delivered by Openreach.
In June, telecommunications tycoon Drahi bought a 12.1% stake in BT, stating that he did not intend to make a takeover offer. This ruled him out of such a move for six months under UK rules, however, that expires next month.
“Speculative interest following a share stake ultimately taken by multibillionaire telecoms dealmaker Patrick Drahi back in June is not to be forgotten, with BT now building towards the potential for increased future shareholder returns.” Keith Bowman, investment analyst at Interactive Investor, said.
“In all, and given an undemanding valuation, analyst consensus opinion currently points towards a tentative buy”.
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