BT share price: 3 things we learnt from its Q1 results

The British telecoms company has taken drastic action in response to its declining share price, with it offloading its fleet management unit and looking to spin off its tower business, but will it get the results it seeks?

BT Group saw its share price continue its descent after recording a disappointing set of results last week, with its management laying out major restructuring plans that focus on rolling out superfast fibre broadband in the UK.

IG looks at the main takeaways from its latest trading update and whether its restructuring plans will reap the right rewards or put added strain on its dividend.

BT accelerates full-fibre broadband in the UK

The lacklustre set of results were met with a pledge by BT to help the UK government in its ambition to rollout superfast fibre broadband throughout Britain by 2025.

‘On network investment, we welcome the Government’s ambition for full fibre broadband across the country and we are confident we will see further steps to stimulate investment.’ BT CEO Philip Jansen.

‘We are ready to play our part to accelerate the pace of rollout, in a manner that will benefit both the country and our shareholders, and we are engaging with the Government and Ofcom on this,’ he added.

Will BT’s growth strategy put pressure on its dividend?

With the British Prime Minister Boris Johnson looking to accelerate its UK-wide rollout of broadband to 2025 and BT obliging in undertaking this monumental task, investors are likely concerned that the plan may put pressure on its dividend to help finance the project.

The company did announce an unchanged dividend of 15.4p a share at its annual results in May, with it reiterating that it plans to deliver the same payout to shareholders this year.

However, its management did indicate at its annual general meeting in July that it was considering slashing its dividend, along with a host of other options that include capital expenditure cuts to fund its broadband ambitions.

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BT delivers Q1 results in line with expectations

Overall, BT delivered its Q1 results in line with expectations, with adjusted EBITDA declines in consumer and enterprise business lines partly offset by a decent growth globally.

As such, the telecoms provider said that it remains on track to meet its full-year guidance. However, the company recognised that it must become more competitive if its to build a strong foundation for future growth.

‘In building a better BT for the future we need to be even more competitive,’ Jansen said. ‘We will continue to take decisive action, including on price, to further strengthen our customer propositions and market position, both to respond to any short-term market pressures and to capitalise on longer-term opportunities.’

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