Britain's biggest telecoms group BT has suspended its dividend until 2021/22, one of the biggest on the London stock exchange, and pulled its financial outlook in response to the Covid-19 pandemic.
The company said the cash saving would bolster it through the expected financial crash that will lead to lower revenue from sports customers, reduced business activity and more cautious spending from multinational customers.
On the same day that rivals Telefonica and Liberty Global announced the merger of their British units to build a stronger challenger, BT also set out plans for a new 5-year programme to modernise the business.
The new programme will cost 1.3 billion pounds ($1.6 billion) to achieve and will deliver annualised gross benefits of 2 billion pounds by March 2025 as it switches off many legacy programmes and uses new technologies to improve.
"Of course, Covid-19 is affecting our business, but the full impact will only become clearer as the economic consequences unfold over the next 12 months," Chief Executive Philip Jansen said. "Due to Covid-19, BT is not providing guidance for 2020/21, at this time."
It said it expected to resume dividend payments at 7.7 pence per share. In 2018/19 it paid a full-year dividend of 15.4 pence.
Jansen has been tasked with building nationwide gigabit fixed and mobile networks for the future while trying to shore up revenue and earnings in the short term.
The company said on Thursday it was working to build its fibre to the home network to 20 million premises by mid to late 2020s, on the assumption that it secures the right regulatory approval.
It said its 2019/20 results were in line with expectations.