BT Group Increases Interim Dividend Amidst Strategic Transformation

BT Group (LON: BT.A) has announced its results for the half-year ending September 30, 2025, showcasing progress in its strategic transformation despite revenue declines.

Headline Numbers:

• Revenue: Reported and adjusted revenue stood at £9.8 billion, a 3% decrease year-on-year, attributed to declines in legacy voice services, lower mobile handset trading, and international business reductions.
• Profit & Margins: Adjusted EBITDA remained flat at £4.1 billion, with cost transformation offsetting revenue flow-through and increased labor costs. Reported profit before tax decreased by 11% to £862 million due to higher depreciation and net finance expenses.
• Cash & Balance Sheet: Net cash inflow from operating activities was £2.8 billion, while normalised free cash flow decreased to £0.4 billion due to increased capital expenditure and the absence of a prior-year tax refund. Net debt increased to £20.9 billion, primarily due to pension contributions and dividend payments.

BT Group's decision to increase the interim dividend by 2% to 2.45 pence per share signals confidence in its financial stability and future cash flow generation. This decision aligns with their policy of distributing 30% of the prior year's full-year dividend, rewarding shareholders amidst ongoing transformation efforts.

Driver Breakdown:

• FTTP Expansion: Openreach added a record 1.1 million net FTTP connections, growing the total connected premises to over 7.6 million.
• 5G Leadership: EE's 5G+ standalone coverage reached 66% of the population.
• Cost Savings: Transformation program delivered £247 million in gross annualised cost savings during H1 FY26, with a cumulative total of £1.2 billion realised in the first 18 months.

CEO Allison Kirkby stated, “BT is delivering on its strategy in competitive markets…BT's transformation is delivering ahead of plan, as our UK focus and radical simplification and modernisation are helping to offset declines from our International and legacy businesses and higher labour-related costs since the start of this tax year.”

BT Group reconfirmed its FY26 outlook, projecting adjusted group revenue of approximately £20 billion, adjusted UK service revenue between £15.3 billion and £15.6 billion, and EBITDA between £8.2 billion and £8.3 billion. The company also anticipates normalised free cash flow of approximately £1.5 billion. Mid-term guidance remains consistent, with sustained revenue growth from FY27 and EBITDA growth outpacing revenue.