BT investors cheer 22% dividend rise

TELECOMS giant BT unveiled a bumper dividend today after beating City forecasts with a huge increase in revenues from broadband internet and networking services.

The company said booming demand for so-called 'new wave' products had more than helped it offset weakness in its traditional fixed-line telephony business.

There are now more than 5m domestic broadband users in the UK and more and more people are getting the higher capacity internet connections.

BT's 1.8m shareholders were given a 10.4p a share payout, 22% ahead of last year's figure. Chief executive Ben Verwaayen said this represented 57% of headline earnings and promised a 60% payout next year.

BT's revenues in this area jumped by 27% in the last quarter of the year and the company said it connected a record 825,000 digital subscriber line customers during the three months to the end of March. DSL technology, which transmits data over phone lines without interfering with the voice service, is becoming increasingly significant for BT as its traditional fixed-line business declines in importance.

The extent of this decline was underlined by a 9% fall in traditional turnover in the last quarter of the year and total revenues were little changed on last year's at £18.6bn. The boom in broadband and other hi-tech services more than compensated for downturns elsewhere ? broadband turnover soared by 77% even as the traditional telephone business suffered at the hands of cheaper operators like Centrica's One Tel and Carphone Warehouse's TalkTalk.

Verwaayen said he was particularly pleased with the turnaround achieved in the Global Services division, which produced a £7m profit against £105m losses this time last year. Global Services offers broadband services to multinationals and three years ago sustained losses of £500m a year. This year it won orders worth £7bn.

Turnover from smaller and medium sized businesses, however, declined by 8%. New wave turnover here grew by 13%, thanks to a 40% increase in the number of Business Broadband customers to 347,000.