BT plans to cut £2 billion in annual costs in the next five years. It is a part of business transformation measures unveiled in its annual results. The company will not pay dividend until 2022.

The operator noted its previous cost transformation programme, announced in May 2018, had been completed a year ahead of schedule. It has generated annual savings of £1.5 billion, at a cost of £670 million. With those cuts complete, management’s attention has turned to measures to simplify its product portfolio, automate customer interactions, modernise IT systems and migrate users off legacy networks to FTTP and 5G.

These changes, along with another reduction in labour costs and payments made to external suppliers, are expected to save £1 billion a year by March 2023, increasing to £2 billion two years later. BT anticipates the plan will cost it £1.3 billion to implement, with the majority of the fees incurred in the first three years.

The company had also taken other measures to refocus its business. In its fiscal fourth quarter, first quarter of the calendar year, it announced the sale of professional services software unit Tikit Group and agreed to sell some of its operations across 16 countries in Latin America. It is also in talks to divest operations in France.

“BT needs to be leaner, simpler and more agile. Today we are announcing a radical modernisation and simplification programme that will use technology to create a better BT for the future. This five-year initiative will re-engineer old and out-of-date processes, rationalise products, reduce re-work and switch off many legacy services,” said CEO Philip Jansen.

The company announced the suspension of its dividend until 2022 to free-up cash for the potential impact of the COVID-19 pandemic and fund continued rollout of 5G and fibre. It also became the latest operator to suspend financial guidance for the current fiscal year. BT noted it would be investing significantly in 5G over coming quarters with a target of doubling its footprint by March 2021.