BT maintains dividend amid rising capital commitments

• Telecom giant reports falling revenue in half year results
• BT shares remain unaffected in immediate response to the announcement

BT Plc has been able to yet again hold on to its dividend amidst fears to the contrary by some analysts. The interim dividend remained at 4.62p per share.

In its half-year results published on Thursday, BT committed to upgrade the internet of 700,000 customers to super-fast speeds "for no extra charge by June 2020." The investment intensive overhaul comes at a time when the group's half year revenue saw a dip of 2% to £11.4 billion. BT, the co-broadcaster on television of Premier League football in the UK and the largest mobile service provider in the country blamed the increase on spectrum fees and content costs for the drop in its earnings (EBITDA) which dropped by 3% to £3.9 billion.

However, the results did not majorly impact the share prices, which saw a rise of 0.7% in the wake of the announcement.

According to Philip Jansen, who took over as BT's Chief Executive in February, the group's results were "in line" with the expectations and that BT was making "positive progress with the government" over further investments in its multi-billion full-fibre programme. The group's network investment has already seen £936 million being pumped into the programme. Although during this spell BT has been able to maintain its dividend, the share price has produced a return of negative 19.28% compared to FTSE 100's 4.92% last year.

In its results, BT also mentioned its plans to cut costs. Its "cost transformation programme" will see 13,000 employees part ways with the company to save £1.5 billion annually.

However, not everyone is impressed with BT's efforts. Jane Fuller, co-director of the Centre for the Study of Financial Innovation said: "I would not touch the company with a barge pole because of the pension deficit." In its half-year results, BT announced a pension deficit of £5.1 billion at the end of September. The company has already made pension payments of £1.1 billion this financial year after losing a court case seeking to switch to a lower pension rate.

With "public service and political interference" affecting BT's business and a possibility of renegotiations with a new government for its all-important full-fibre investment drive, "this might be the last year they could hold on to their dividend," Ms Fuller said.