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BT dismisses share price plunge as it retains dividend, unveils staff cuts

BT Group Chairman Jan du Plessis urged investors to look beyond its short-term financial headwinds, as the group announced a flat dividend, a projected revenue decline and 13,000 job cuts, sending its share price down 8% in early trading.

The British telecom giant maintained its dividend of 10.55 pence, against a full-year dividend of 15.40 pence, amid a series of cost-cutting measures including the loss of jobs, saving £800 million.

BT also revised its outlook for 2018 and 2019, forecasting a 2% decline in underlying revenue for the full year, adjusted EBITDA between £7.3 billion and £7.4 billion, about £3.7 billion worth of capital expenditure and normalized free cash flow of £2.3 billion to £2.5 billion.

BT Chairman Du Plessis said he was focused on the group's long-term, sustainable returns, rather than its three-year outlook.

"You do not build great businesses by being fussed about tomorrow morning's share price. I have always believed in long-term incentives ... we are not going to do things which get us a short-term impact on the share price," he told analysts during a May 10 earnings call.

Given ongoing competitive pressure likely to weigh on performance over the next two financial years, Du Plessis said the company's update on dividend and strategy had been a "seriously considered decision" and added that the company has "absolute confidence that this is the right strategy."

"It is not an excuse for short-term underperformance," he noted, adding that the group's strategy would eventually pay off and create value for shareholders.

The company announced a 3% quarterly revenue decline to £5.97 billion for the three months ending March 31, translating to a 1% fall in revenue to £23.72 billion and 3% drop in adjusted operating profit to £3.99 billion for the full year.

Adjusted profit before tax fell 2% for the year to £3.44 billion but was up 1% for the quarter at £1.05 billion. Adjusted EBITDA was up 1% for the quarter to £2.08 billion but down 2% to £7.51 billion for the full year.

Challenging market conditions at the group's Global Services division, which came under fire for an accounting scandal at its Italian operations that cost the telecom giant a £530 million write-down last year, resulted in a 33% decline in quarterly adjusted EBITDA and a 12% decline for the year.

The company's BT Consumer and EE brands were the only divisions to register full-year growth, with adjusted EBITDA up 1% and 17%, respectively.

BT CEO Gavin Patterson said the group's results were broadly in line with its guidance and expectations. He added that after a difficult 2017, 2018 would be a period for "disciplined delivery and risk reduction."

He noted that BT had addressed many of the uncertainties that the market had, and that the group would focus on maintaining customers through more converged offerings as volume growth in the telecom market slows.

"We want to focus on customer retention, rather than customer acquisition," Patterson said.