BT released positive final results on Thursday, providing investors with a welcome surprise increase in revenue per user and a small hike in the dividend.
BT investors have been licking their wounds recently and will be over the moon with a 10% increase in early trade. While it barely touches the side in terms of losses over the past year, it signals the company may be on the verge of a turnaround.
Today’s gain in shares will be down to investors becoming hopeful about the future as opposed to excitement about recent results.
Adjusted EBITDA rose 2%, while revenues for the year gained 1%. These are small gains, but they are far better than the revenue declines shareholders were dealt last year.
The board felt confident enough to sign off on a small dividend hike, which will go a long way toward boosting investor sentiment. BT’s dividend will total 8p for the full year, an increase from 7.7p in the year prior.
“On the face of it, BT’s full year earnings look positive. Average revenues per user increased by 10% year-on-year, investors are getting a small bump in the annual dividend and the business added nearly 400,000 Openreach customers in Q4 alone,” said Mark Crouch, analyst at investment platform eToro.
“Under the bonnet however, things don’t look quite so rosy. While revenues increased, BT’s profits actually fell by 31%. Another growing concern is the firm’s mounting debt pile, which has risen by another 4% and now stands just short of £20bn. The company has set out £3bn of annualised cost savings to be reached by the end of 2029 and vowed to double free cash flow, which will go some way in countering this.
“The biggest issue BT faces is the ferociously competitive market in which they operate. Broadband providers seek to undercut rivals – forcing down prices which in turn has heaped pressure on BT’s margins.
