BT lifts dividend, maintains outlook as pension deficit narrows

(Sharecast News) - BT Group raised its interim dividend and maintained its full-year guidance on Thursday as it reported higher revenues and profits for the first half, alongside a reduction in its pension deficit. The telecoms giant increased its interim payout by 2% to 2.5p per share from 2.45p a year earlier, while reiterating its forecast for normalised free cash flow of around £2bn in the year to March 2027 and £3bn by the end of the decade.

In a separate announcement, BT said the deficit in its pension scheme had narrowed to £2.7bn as of June 2026 from £3.7bn three years earlier, with the funding level improving to 92.3% from 91%.

The company said previously agreed pension contributions would be substantially replaced by zero-coupon bonds, while an additional £282m in funding would help keep the scheme on track to be fully funded by 2030.

BT said the agreed funding measures would substantially reduce the pension deficit from £2.7bn to around £300m, with the remaining shortfall expected to be covered by future investment returns by 2030. The arrangements also allow shareholder distributions of up to £1.5bn in the current financial year, rising to £2bn by 2030, without triggering additional pension payments.

Turning to its half-year results, BT reported a 1% increase in revenue to £8.8bn for the six months to September, driven by higher handset sales, while adjusted EBITDA rose 1% to £4.1bn as cost savings offset declining voice revenues.

Pre-tax profit increased 12% to £1.1bn, helped by lower restructuring costs, although normalised free cash flow slumped 59% to around £200m due to higher working capital outflows. Net debt rose to £21bn from £20bn at the end of March.

BT said its Openreach division recorded more than 1.1m net additions to its full-fibre network during the period, with connections exceeding 10m in October. Meanwhile, its transformation programme delivered £312m in annualised savings during the first half.

Chief executive Allison Kirkby said: "BT delivered a strong first half, with further strategic momentum in a competitive market, resulting in growth in revenue, EBITDA and customer satisfaction."

The company maintained its full-year forecast for adjusted revenue of £17.1bn to £17.6bn and adjusted EBITDA of £8.1bn to £8.2bn, excluding the impact of its recently announced TalkTalk acquisition.