Chairman says BT will emerge from recession stronger

BT expects to deliver well over £1billion of cost *reductions in the current financial year, whilst improving customer service, investing in a fibre future and aiming to improve free cash flow** by over a third. This message was delivered by BT’s Chairman Sir Michael Rake, addressing shareholders at the company’s annual general meeting at the Barbican Centre in London today.

Sir Michael acknowledged that the company’s 2008/09 financial year had been a difficult one. Whilst three of the company’s four market facing divisions (BT Retail, BT Wholesale and Openreach) had delivered well, the performance of BT Global Services had been unacceptable and led to the company making a number of substantial charges. Sir Michael said that improving the performance of BT Global Services was a key priority.

Turning to regulation, Sir Michael committed BT to fighting for fairer markets. He said that BT must be able to invest and compete in any other country in the same unrestricted manner in which non-UK companies can invest and compete here. In the UK he reminded shareholders that BT has invested billions of pounds in its network, which it makes available to all communications providers on a fair and equal basis. He said it was vital that others also share their assets on a fair and equal basis. In particular, he welcomed Ofcom’s proposals to address distortions in the Pay TV market but called on the regulator to act swiftly to enforce fair access to premium TV content.

Speaking about the full year dividend of 6.5p Sir Michael said: “The Board is committed to delivering attractive returns for shareholders. We believe that operational improvements in the business will generate sufficient cash flow to allow the dividend to grow at the same time as we invest in the business, reduce debt and support the pension scheme”.

Sir Michael said that by building a better business through focus on customer service, cost transformation and investing in next generation networks, the company will emerge stronger from the recession.

* capital expenditure and operating costs
** before pension deficit payments