FY26 Results presentation transcript

‌ALLISON

‌Slide 1: Cover

‌Slide 2: Forward looking statements Slide 3: Allison Kirkby title slide‌

Good morning everyone and welcome to our full year results presentation. Thank you for joining us.

I'll start with an update on our strategic progress over the past year, then Simon will take you through the financials. After that we'll share our plans and outlook for the year ahead.

We'll of course take your questions at the end.

I'm also delighted that members of our executive committee are here with us today. Please do take the opportunity to say hello at the end of the meeting.

I will now start with the full-year highlights on slide 4…

Slide 4: FY26 Highlights - Another year of strong delivery

It has been another year of strong progress. Amidst all the noise in our sector and turbulence in the world, we stayed focused on what matters most, the delivery of our strategy - and there is a lot to be proud of:

• Openreach set two new records, achieving the accelerated full fibre build I set out last year, as well as delivering record connections;
• We strengthened our mobile leadership, with EE winning three major awards by a wide margin;
• Our brands performed well, with customer satisfaction improving across BT, EE and Plusnet - setting a new Group record and helping us grow our retail customer base;
• We continued to transform our operations at pace, more than offsetting headwinds including higher National Insurance, cost inflation and voice declines. Building on this momentum, we are now extending our transformation programme as Simon will explain later. This will leave us with a simpler business in the future - with further upside to come from AI.
• At the same time, we continued to sharpen our focus on the UK - successfully exiting five non-core businesses and driving a more radical transformation of our International division;
• Financially, we met our guidance and grew EBITDA. And, reflecting that performance and our confidence in the future, we are increasing the total dividend to 8.32 pence per share and giving clarity on our dividend growth in the years ahead;

• Finally, we are confirming our outlook, including reconfirming £2 billion of normalised free cash flow for this current financial year, and £3 billion by FY30.

  Let me now take you through each of our Customer Facing Units.

  ‌Slide 5: Openreach | Record build and connections, step change in efficiency Openreach executed brilliantly this year, building to a record 4.8 million homes and

  businesses, including 1.5 million in the final quarter alone. Huge credit to Clive, Katie and the whole Openreach team for delivering at scale - safely, on time and on budget.

  We have now passed 23 million premises - around two-thirds of the UK - and remain on track to reach 25 million by the end of the calendar year. This is the fastest fibre build in Europe, with 9 million premises passed in the last two years alone.

  But building is only good if you also connect - and we did. We connected a record 2.2 million customers driven by strong demand for next-generation services, and today I can tell you we are now up at over 9 million customers, with a 39% take-up rate.

  As I have said before, building and connecting is our best defence, and we are starting to see that translate into lower line losses. We beat the improved target we set in January, with lower losses to retail competitors, partly offsetting higher losses to wholesale altnets during the year, in what has been a flat broadband market overall.

  Looking ahead, we expect line losses to reduce again this year to around 800,000, encouraged by both the last quarter's exceptionally strong build - and our belief that retail altnet competition is reducing. We continue to grow broadband ARPU, which increases with CPI and also with our upsell to full fibre and to higher speeds. This led to flat broadband revenue but with a much higher full fibre mix. And in our billion-pound ethernet business, revenues grew a further 4%. The transition to full fibre is also driving material efficiency benefits. Faults across fibre and copper reduced by a record 18%. This helped us cut direct labour by more than 10%, while planning for the step-down in build and also keeping service quality high.

  All of this drove a record year for Openreach, with growth in EBITDA well ahead of revenue. Moving to Consumer…

  ‌Slide 6: Consumer | Growing customers, converged homes and record NPS

  This is the first year in eight that we have grown our customers across all three core Consumer products. That helped us return to service revenue growth in the second half of the year, in line with what we said in November, despite around a one percentage point drag from voice as we head towards PSTN closure. Our performance reflects the strength of our three leading and loved brands, which together serve the full breadth of the connectivity market. Our brands are driving continued strong upsell to fibre, which now accounts for over half of our broadband base. And because fibre customers are happier customers, our broadband churn fell in the year despite a continued competitive market. More homes are also taking at least two services from us, with our "EE One" proposition driving convergence to 27%, up two percentage points over the year. Which also helped keep mobile churn at record lows.

  And we keep winning mobile quality awards, with top placings from RootMetrics, Umlaut and Opensignal.

  All of this drove increased customer satisfaction, with improvements across all three brands.

  ARPUs were slightly down overall, but improved through the year despite pricing competition, and underlying broadband ARPU, excluding voice, increased.

  Finally, we achieved better customer outcomes whilst also transforming our operations -nearly offsetting additional costs which included higher National Insurance and National Living Wage, and the investment in service that allowed us to complete nearly two million migrations off the PSTN in the year.

  Moving to Business…

  ‌Slide 7: Business | Transformation underway, growth foundations now laid

  Service revenue grew 1% in the year excluding the impact of voice, and down 2% at total revenue. Customer satisfaction improved, thanks to our investment in customer experience, and our accelerated move to modern, digital and AI-supported platforms and to our streamlined product set. And we stepped up our commitment to innovation with strategic launches in cyber, Sovereign and AI capabilities.

  And looking into each segment …

• Within SMB, the service revenue trajectory was similar to Consumer, with a better second half, and growth in both mobile and IP Voice customers.
• In Corporate and Public Sector, we won landmark connectivity and security deals including BAE Systems, Northern Ireland Electricity Networks and EasyJet.
• And Wholesale is now well diversified across products and grew its EBITDA throughout the year.

Overall, the Business division's transformation is accelerating, with momentum in customer wins, real progress in delivering simpler, better customer experiences and in market-leading innovation….all powered by our relaunched and refreshed BT brand.

Finally moving on to International…

‌Slide 8: International | Sharpened focus, divestment of non-core businesses

As you know, we successfully carved out our International division in July and since then, we have divested five businesses that didn't fit with our focus on serving the connectivity needs of major multinational customers.

Revenues however remained under pressure on a pro forma basis from legacy and managed contract declines, but the team worked hard to offset this with £70m of cost transformation initiatives in the year, driven by structural reductions in footprint, products, overseas network and our IT estate which will benefit us in years to come.

Now under the leadership of the maestro, Clive Selley, we are continuing to simplify the division and to upgrade customers to Global Fabric, our Network-as-a-Service platform, to drive proforma EBITDA growth this financial year.

[PAUSE]

Now let me hand over to Simon to take you through our progress on Transformation and the numbers in a bit more detail.

‌SIMON

‌Slide 9: Simon Lowth title slide

Thank you Allison and good morning to everyone. So, starting with our transformation on slide 10.

‌Slide 10: Transformation - solid progress ahead of plan

Our transformation not only reduces cost, it also improves experience of our customers.

By the end of the financial year, we achieved £580 million in annualised cost savings, bringing total savings to £1.5 billion over the first two years, at a cost to achieve of £0.8 billion.

Our overall workforce including subcontractors reduced by 7%, despite the fast pace of our fibre build. Direct labour fell 10% with reductions in all our units, with the highest in Openreach and Corporate Functions.

We cut our energy use by 6% following the closure of 3G and the optimisation of our 2G network ahead of its decommissioning later in the decade. While the conflict in the Gulf has pushed up energy prices, we entered FY27 well protected-around 90% hedged at pre conflict prices, and approximately half hedged into the medium term. Total energy cost is around £500 million, of which half is non commodity levies.

We continued to reduce units on legacy networks, driven largely by the PSTN. We also reduced business IT applications in billing, security and network management systems as we upgrade to strategic technology.

Moving on to our financial results by division…starting with Openreach.

‌Slide 11: Summary of customer facing units in FY26

Revenue grew 1% in the year driven by CPI-linked price increases and an improved FTTP mix in broadband. This was partially offset by declines in the broadband and voice-only customer bases.

Adjusted EBITDA grew by 5%, reflecting revenue flow through and continued cost transformation, including lower fault rates, labour and energy costs, all partly offset by pay inflation.

In Q4 EBITDA grew by 9%, reflecting the impact of commercial and storm-related costs in the prior year.

Adjusted service revenue was flat, as higher average customer bases were offset by modestly lower ARPU, with a return to growth, as previously guided, in Q4 and H2.

Consumer EBITDA declined by 2%, driven by the flow through of service revenue and higher input costs including higher taxes, partly offset by significant cost reduction. Excluding the effect of some prior year one-offs in the mid tens of millions, EBITDA for this year would have been broadly flat.

In the first half of FY27 we expect brand refresh costs and the voice transition will be a headwind in the mid tens of millions in H1 but sports content costs will be a tailwind in H2 also in the mid tens of millions.

Business EBITDA declined by 5% for the year reflecting the flow through of revenue from high margin legacy products, partly offset by tight cost management and ongoing modernisation activity.

Similar to Consumer there will be higher marketing spend in the first half of FY27, balanced by cost improvements in the second half.

Moving to look now at our Group results on slide 12.

‌Slide 12: Financial performance in line with our plan

Adjusted UK service revenue was down 1%, with growth in Openreach offset by slightly lower Business revenues and higher Group eliminations. In the fourth quarter we returned to growth, up 1%.

As a result, Adjusted EBITDA for the year was £8.23 billion, and excluding the five divestments we made during the year, up just under 1%.

As planned, we successfully realised value from forward selling redundant copper, locking in the price and covering part of our accelerated fibre build.

We also continued to meet our customers' needs for longer, 36-month, handset repayment contracts and we sell receivables to neutralise the cash impact of these longer contracts. We normalise payment terms to handset vendors, also helping us to manage working capital

between years - where FY25 had an unexpectedly strong receivables and inventory inflow late in the year.

The IAS 19 pension deficit increased by £100 million reflecting updated views on mortality and inflation, and lower asset returns than expected, partly offset by scheduled contributions.

Although the geopolitical landscape has driven financial market volatility, the BTPS remains well hedged against movements in interest rates and inflation, and around 50% of longevity risk is hedged.

Our funding plan remains on track and the next triennial review will take place as at 30th June.

And as Allison just announced, we're proposing a final dividend of 5.87 pence per share, making the full FY26 dividend 2% higher at 8.32 pence per share.

[PAUSE]

Back to Allison to look at our strategic priorities.

‌ALLISON

‌Slide 13: Allison Kirkby title slide

Thank you, Simon.

Two years into this chapter for BT, I am proud of the progress we have made - and convinced there's much more to come.

As the next slide shows…

‌Slide 14: Our strategy

… Our ambition is clear: to become the UK's most trusted connector of people, business and society.

Trust could not be a more important mission and differentiator in today's world, as we look to ensure everyone is connected to our great networks, with the best security embedded within them and with excellent service around them.

Our growth strategy has three core pillars: building the best and most trusted digital networks; connecting customers across all our brands and in all segments with multiple services; and accelerating our modernisation to restore leadership in everything we do, and this includes building a tighter and more delivery-focused culture - one that is centred especially on our customers.

As we realise this strategy we will create value for all our stakeholders. And through a financial lens this includes the delivery of our financial commitments of sustained UK service revenue growth, EBITDA growth ahead of service revenue, and doubling this year's normalised free cash flow.

So why do we believe we have a winning strategy …?

‌Slide 15: We have unrivalled network scale, customer reach and trust

Well, we have unrivalled network scale, customer reach and trust. A powerful set of competitive advantages, all focussed on delivering for the UK:

• We have unmatched nationwide network infrastructure - the largest full fibre network, offering the greatest reach for both our wholesale and retail customers, and the highest quality multi award-winning mobile network, with 5G+ now reaching over 70% of the population.

• These networks are underpinned by our industry-leading technology and engineering capabilities enabling us to build and operate with exceptional efficiency, quality, resilience and thought leadership - from innovation on the most efficient fibre trenching to quantum cryptography and network APIs that protect your credit card transactions.

• We have the largest retail market share, with upside as we cross sell into the 45% of UK homes that already take at least one of our services - supported by our deep presence in local communities through our 400 retail stores, 18 UK based call centres, 20,000 field engineers and 3,000 cyber engineers. No-one has the national scale BT has in the communities where our customers live and work.

• We bring all this to market through a complementary portfolio of leading and loved brands spanning the whole market, from value to premium, and from retail to wholesale, allowing us to win across all segments while strengthening loyalty and reducing churn.

• And lastly, we have long-standing, trusted relationships with customers, partners and government, built on our heritage of delivering mission-critical national infrastructure for the past 180 years.

  Let me now take you through the outlook for Openreach, Consumer and Business, where we'll bring these competitive advantages and the growth levers to life.

  ‌Slide 16: Openreach | The pre-eminent fibre asset in Europe

  Standing back for a moment, it's worth recognising the scale of what Openreach has achieved. By the end of this calendar year, we will have passed 25 million homes and businesses - the majority built in just over five years.

  That is the largest wholly-owned fibre asset in Europe, built at the fastest pace.

  This means we have no complex, expensive and disruptive sale and leaseback nor joint venture arrangements - and I really want to recognise Simon and the finance team for avoiding that.

  And, by the end of the year, Openreach's wholly owned network will pass the highest proportion of premises within its home market among all major operators in Europe, at 74% -with more to come.

  Moving to how we measure our success…

  ‌Slide 17: Openreach | Levers to sustainable growth and strong returns

  Our strategy remains the same: build and connect faster than anyone else, at a lower cost and with highest quality - delivering the best product for all our CPs.

• We are on track to complete the 25 million roll-out, at around £300 per home passed -close to half the altnet average - supporting sustainable pricing for both our customers and our shareholders. And we will build to 30 million, aligned with the government's re-profiled BDUK rural subsidies, which now run to FY32.

• Our powerful provisioning engine protects our base, drives ARPU through indexation and upsell, and achieves best-in-class costs, while enabling new technologies such as XGS-PON.

• Fibre has 60% fewer faults than copper, and this will continue to improve both customer experience and cost over time.

• And finally, we remain focussed on customer experience - particularly connecting on time and to the highest quality - as we compete for every customer.

  Now… [NEXT SLIDE]

  ‌Slide 18: Openreach | Building and connecting is our best defence

  Let me illustrate how our fast build and strong connection momentum are improving our competitive position.

  On the left-hand side, the chart shows the percent of Openreach broadband lines across four segments.

  First, the green area - this is where Openreach is the only fibre provider. Here we grow our base and therefore we grow the broadband market, and clearly as we keep building, the areas where we can do that keep increasing too.

  Next, the grey area represents the large and expanding competitive market, which we expect Ofcom will progressively deregulate in the years ahead.

  Third, the amber area - where neither we nor others have built fibre or coax - is where customers may be likely to choose mobile or satellite alternatives. This area is shrinking as we build, enabling us to move customers onto higher-quality fixed broadband.

  Finally, at the top of the chart is the red area - where competitors have fibre and we do not -that has reduced by around half over the last two years alone. This is where we saw around half of our losses last year - and so continuing to build here at pace is critical, alongside working closely with our CPs to win customers back.

  This means that overall, our riskiest exposures are shrinking fast.

  Then on the right-hand side, to reduce line losses we also need to connect.

  You can see that's exactly what we are doing - we expect more than 50% of Openreach broadband customers to be on full fibre during FY27 - an important milestone towards its Fibre First vision. And we will continue to design commercial offers to incentivise migration to fibre.

  This is the right strategy to compete and win, and we are making great progress. Moving on to Consumer …

  ‌Slide 19: Consumer | Loved and trusted British brands

  For those of you here in One Braham, I hope you saw as you came in some of the brilliant advertising campaigns we are running, including for the BT brand which we refreshed and relaunched two weeks ago.

  I strongly believe that our portfolio of brands is the most powerful way to reach and serve ALL segments of the UK market today and to maximise returns on our network investments.

  As we enter another period of pressure on the cost of living, these brands as well as our convergent offers allow us to deliver exceptional value to all, depending on their needs.

  And our brands have very distinct identities and heritage:

• BT is positioned as the trusted British leader, reliable, high quality and secure, with high levels of support across all service channels, consumer and business;
• EE is innovative, personal and dynamic, powering life through converged experiences, and leading the way - first with 5G, first with WiFi7 and first with Safer SIM plans for under 18s;

• And Plusnet is positioned around simplicity and value - winning best customer service from USwitch for the eleventh time this year.

  And we are now moving ahead at a good cadence with new products, such as a new BT-branded smart hub with threat protection for all connected devices. And just yesterday we launched BT Mobile to our most loyal BT broadband customers, with built-in call screening and inclusive roaming.

  All of this will build towards UEFA Euros 2028 where we are really looking forward to being the official telecoms partner, bringing it to life with dedicated 5G+ network slicing - another example of BT being behind a brilliant thing for its customers and the country.

  In the weeks and months ahead you can expect more from us, whether enriching our EE One convergence proposition, or launching satellite broadband with Starlink for the hardest-to-reach homes.

  So, how do we get to sustainable growth …

  ‌Slide 20: Consumer - Levers to sustainable growth and strong returns

  We will grow in Consumer by using our leading brands, products and services to drive customer growth and convergence, delivering improved revenue and customer lifetime value.

• We have the best mobile network, now boosted by fast-growing 5G+ coverage with a target of 99% of population by FY30. And we will continue to connect customers at pace to full fibre, with the best products and the best in-home experience with WiFi7 as standard for all EE Fibre customers.

• We will increasingly bring our products together, giving our customers more convenience, value and ease - while also reducing churn and increasing cross-sell. For example, mobile on EE One has churn 35% below the average even though it is mainly sold on 30-day contracts; and our TV attach rate is 25% higher.

• And, of course, we will keep improving customer experience through simpler journeys, powered by personalised data, AI and more digital capabilities.

  On AI, early results are encouraging - and the benefits go beyond just saving time and cost. For example, in our call centres AI is already helping us serve our customers with better information, and to cross sell more - all while also building our own guides' work satisfaction and ensuring vulnerable customers get the care they need. And there is much more to come,

  Moving on to Business …

  ‌Slide 21: Business - Connecting, protecting and supercharging Britain

  …which accounts for just over 15% of group EBITDA. Here, we are now accelerating the transformation of this division, end to end, from customer journeys, to products, services and the capabilities of our people.

  Our three segments allow us to serve the full breadth of the UK enterprise market, and each contributes broadly equally to profit:

• For Small and Medium Sized Businesses we provide high quality connectivity and security solutions, now with a refreshed BT brand, with access to business expertise in all 400 of our stores. We are investing in improved customer experiences and products to grow our leadership in the small business market. For example just yesterday we launched a market-leading cyber campaign, bringing industrial-grade cyber-security from CrowdStrike to small businesses, supported by cyber assessments and advice from BT's advisors.

• In Corporate and Public Sector, we are the strategic partner for the country, including support for much of the UK's Critical National Infrastructure. We have launched the UK's first Sovereign platform, are investing in AI to support our critical Managed Services portfolio, and offer the UK's best network capability, including 5G+ mobile network slicing. And we have excellent momentum in the public sector and in defence, where we are uniquely well positioned due to our sovereign and security capabilities.

• And in Wholesale we provide open access to BT's exceptional network assets, commercialising our scale and resilience for ALL parts of the market, making sure we apply strict return on capital hurdles, which includes not allowing others to market the EE network brand.

  Looking forward …

  ‌Slide 22: Business - Levers to sustainable growth and strong returns

  … we are engaged in an exciting and rapid transformation of our Business division.

  Our goal is for Business to lead in all of its segments, by combining great customer experiences with a market-leading product portfolio, anchored in security and sovereignty - fuelled by the innovation that only BT's scale can deliver.

• We will return to growth in our customer base, powered by our unique BT brand, by improved customer experiences and by the UK's best portfolio of business products.
• We will simplify our business, including leaving legacy IT and platforms behind, to create a lean, AI-powered operation capable of moving at the speed of smaller businesses but with the exceptional advantage of BT's scale and expertise.

  We have made a material investment to upskill all BT Business employees - including the creation of nearly 1,000 Data and AI apprenticeships - and just on Monday we signed a strategic partnership to deliver AI-Ops with Accenture.

• We will upgrade our customers with a product and service portfolio that helps their businesses and organisations to succeed, built on network resilience and innovation, defended by market-leading cyber and sovereignty, and powered by innovative solutions tailored to each industry.
• Finally, we will deliver the best customer experiences in the market, whether investing in cyber advice for SMBs, AI-powered support for our customer advisers or our investment in AI-Ops for our managed services business for larger enterprises and organisations.

  Now I'll hand back to Simon to take us through our cash flow profile, our extended and upgraded transformation plan and capital allocation priorities.

  ‌SIMON

  ‌Slide 23: Simon Lowth title slide

  Thank you Allison. Moving to slide 24…

  ‌Slide 24: Clear path to normalised free cash flow growth

  We will double normalised free cash flow from £1.5 billion in FY26 to £3 billion in FY30.

  Starting with capex, we are now past peak investment as the full-fibre build ramps down from nearly 5 million homes a year to around 1 million and as we also complete the replacement of our legacy IT systems. As a result, both accrued and cash capex will reduce by well over £1 billion from FY26 to FY30, with an initial ramp down in FY27. We expect sustained EBITDA growth. Cost transformation will enhance EBITDA margins building on sustained UK service revenue from our multi-brand strategy, convergence, network leadership and differentiated service.

  Below EBITDA, lease costs will remain broadly stable, and net working capital will be broadly neutral.

  For FY27 specifically, as we said in March, there will be a £100m working capital drag as a result of the Telecoms Access Review impacting the broadband anchor product. We will offset this through several measures including efficiencies and some further forward sale of redundant copper.

  Interest costs will rise modestly, with debt well termed out, leverage reducing and rates hedged. Cash taxes will increase to the mid-hundreds of millions by FY30 as the benefit of full expensing reduces.

  Taken together this provides a clear and deliverable path - from £1.5 billion today, to £2 billion in FY27 and £3 billion by FY30.

  On to transformation which plays a critical role in delivering this…

  ‌Slide 25: Extended and increased transformation programme

  Our transformation of BT Group continues to progress - delivering improved customer experience alongside materially lower headcount and costs, spanning both operating and capital efficiency.

  Today we are announcing the extension of our transformation programme by one year. Our updated programme from FY25 to FY30 will deliver £3.7 billion of gross cost savings at a £1.4 billion cost to achieve. Of the remaining gross cost savings of £2.2 billion about three quarters will be delivered in FY27 and FY28, with the rest evenly in the remaining two years.

  Our programme consists of four broad areas:

• First, Openreach workforce reshaping post the fibre build ramp down;
• Second, network engineering efficiencies, and the shutdown of networks, such as PSTN, 2G and 3G, leading also to material energy savings;
• Third, simpler products and processes, leading to savings in our IT budget;
• Fourth, continued organisational simplification and restructuring right across BT

We now expect our FY30 Total Labour Resource, including subcontractors, to fall to the lower end of our previously announced 75-90,000 range, so 75-80,000.

We expect restructuring costs to achieve of just over £200m in each of the next two years, dropping to around £100m in FY29 and FY30.

Moving on the next slide…

‌Slide 26: Transformation accelerating delivery of structural cost reduction

Our transformation programme is not just about cost - it is also about improving how we operate, with simpler processes and better ways of working, increasingly enabled by AI.

We will significantly improve customer experience creating seamless digital-enabled customer journeys, with progress tracked closely through Group and unit Net Promoter Scores.

We will also continue to simplify BT, reducing the number of applications, and unlocking efficiencies across all our processes.

By FY30, we will have delivered cumulative gross cost savings of £6.7 billion over the decade to FY30. These cost savings will have offset significant cumulative inflation, and driven EBITDA growth from a smaller, more focused, more profitable BT.

And finally, an update on our copper exchange exit programme. We are working closely with industry, Ofcom and government to close legacy exchanges as we transition to full fibre network. This will improve energy efficiency and accelerate the UK's transition to modern digital networks. Some exchanges will be vacated ahead of the Telereal lease expiry in 2031, and indeed we recently closed the first at Deddington. The exchange closure programme will deliver further significant savings beyond FY30.

I will now turn to our capital allocation policy and deployment of our expanding cash flow …

‌Slide 27: Rigorous and disciplined approach to capital allocation

We remain committed to our capital allocation policy, which we have had in place, and communicated consistently, since the start of our FTTP build in FY19.

First, we will continue to invest for growth in full fibre, 5G and our core networks, as well as transforming our IT. But the level of capex will drop by more than £1 billion compared with

FY26, as we ramp down the FTTP build and complete our IT modernisation. We remain confident that our investment programmes will deliver attractive long-term returns, including in FTTP where the 'fair bet' endorsed again by Ofcom in the March Telecoms Access Review allows a fair return even under future price regulation.

Second, we will continue to support our pension commitments. We will agree the next valuation as at 30 June this year. As part of the funding plan, we have started to contribute via the co-investment vehicle which will refund to BT any funds not required for the BTPS from 2032.

Third, we will maintain our strong balance sheet. We remain committed to a BBB floor and a BBB+ through cycle credit rating target, which we believe delivers the optimal cost of capital for the Group. We will progressively reduce our leverage once we've completed the 25 million full-fibre build in December 2026.

Finally, residual cashflow, being NFCF less specifics and spectrum costs, will then be available to fund dividends to our shareholders.

And in that regard, we are announcing today that the board expects to increase our dividend per share in FY27 and onwards by low to mid-single digits per annum until metrics consistent with a BBB+ credit rating are achieved; and thereafter residual cash flow will be available for enhanced distribution to shareholders.

On that note, I'll hand back to Allison.

‌ALLISON

‌Slide 28: Allison Kirkby title slide

Thank you, Simon.

As I said earlier, amidst all the noise and turbulence whether in our sector or in the world around us, we are laser-focussed on what matters most - the delivery of our value accretive strategy as we unlock BT's full potential.

So moving on to our outlook…

‌Slide 29: Outlook: Path to substantially higher free cash flow

Starting with FY27, we expect total revenue of around £19 to £19.5 billion pounds.

UK service revenue is expected to be between £15.1 and £15.4 billion pounds - broadly flat to slightly down on FY26, reflecting a £150-200m drag from voice as we move to the closure of the PSTN in January.

Adjusted EBITDA is expected to grow year on year, to between £8.2 and £8.3 billion pounds.

Turning to capex, now we have passed the peak we expect this to be around £4.3 billion on an accounting basis, with some prior-year spend falling into FY27 in cash terms.

And we continue to target normalised free cash flow for FY27 of £2 billion, exactly what we promised this time two years ago.

Looking further ahead, our medium-term guidance to the end of the decade remains: sustained revenue growth, EBITDA growing ahead of UK service revenue, and Normalised Free Cash Flow reaching £3.0 billion by FY30 with an updated distribution policy as Simon has just set out.

‌Slide 30: Another year of strong delivery

So to close, this was another busy year of strong delivery. We delivered a record fibre build and take-up, reduced line losses and returned to customer growth in Consumer - all whilst achieving record customer satisfaction and delivering again on our multi-year transformation and financial commitments.

Of course, there is much more to do, but we are firmly on the right path - as we continue to build a better BT for all of us.

[PAUSE]

Thanks for listening. We will now move to Q&A. Given the time available and the number of people in the room and online, please keep it to one question per person.

First question please.

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