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BT (LON:BT.A) shrugged off lower revenues and rewarded shareholders with a bumper dividend hike as annual profits and cash flow climbed sharply.
Gavin Patterson, chief executive, said it had been a ground-breaking year for the telecoms giant, with the offer for mobile group EE, expansion of BT Sport and record fibre connections in the final quarter.
Openreach, the infrastructure arm, added almost half a million properties to the network in last three months, an increase of more than 30%, taking its total number of premises with a super-fast connection to more than 22mln.
Rivals Vodafone and TalkTalk had previously voiced competition concerns and called for BT to potentially hive off its subsidiary, but the firm said the claims were “ludicrous”.
BT Sport is now in more than 5mln homes in the UK, the company said, following the extension of the Premier League deal and the addition of new UEFA Champions League and UEFA Europa League games.
Overall, revenue fell 2% in the year to March due to a negative impact from foreign exchange movements and increases in transit revenue.
But pre-tax profit grew 14% to £2.6bn, led by BT’s consumer business which grew earnings by 24% over the year, reflecting the up-tick in broadband sales.
Over the year the company made a number of cuts leading to a 6% decline in operating costs in the fourth quarter.
Patterson added: “We made some key decisions and announced some major investments to underpin the future growth of the business.
“Profit before tax and free cash flow have both grown strongly and we have delivered or beaten the outlook we set at the start of the year.”
BT also raised its annual dividend by 14%.
Broker Jefferies said the improvements made in BT Sport and the guidance for 2016 should allow investors to look beyond the “soft” revenues. It values BT’s shares at 515p.
Moving forward, BT said it expects to see an up-tick in revenue in 2016 with modest growth in earnings .
Shares were flat today at 454p despite the positive news.