BT Group is entering a new phase of AI-driven operational transformation and cash flow optimization after completing the peak stage of its nationwide fiber infrastructure expansion, according to its FY26 full-year and Q4 earnings results.
The telecom operator is shifting focus from aggressive network deployment toward capital reduction, digital automation, operational efficiency, and long-term free cash flow generation as it scales artificial intelligence across enterprise services and internal operations.
BT Group reported adjusted revenue of £19.6 billion for FY26, down 4 percent year-over-year due to weaker handset equipment sales and the impact of non-core international divestments. Adjusted EBITDA reached £8.23 billion, representing growth of just under 1 percent excluding the impact of five international business disposals.
The company achieved normalized free cash flow of £1.5 billion during FY26 and reaffirmed its targets of reaching £2.0 billion in FY27 and £3.0 billion by FY30, supported by lower future capital expenditure requirements and ongoing digital transformation programs.
A major strategic priority for BT is the deployment of AI-enabled operational systems across network management, managed services, and customer operations. The company announced a strategic AI-Ops partnership with Accenture to modernize managed services and enterprise operations through AI-powered automation platforms.
BT is also investing heavily in workforce digital skills to support its leaner operating model. The telecom operator has created nearly 1,000 internal data and AI apprenticeships as part of its technology transition strategy.
BT is aggressively simplifying legacy IT architecture by shutting down older business applications tied to billing systems, security platforms, and network management operations. The modernization effort is expected to improve efficiency, reduce operating costs, and accelerate automation adoption across the organization.
The infrastructure division, Openreach, continued to drive operational momentum during FY26. Revenue increased 1 percent due to CPI-linked pricing and improved fiber mix, while EBITDA grew 5 percent, including 9 percent growth in Q4 alone.
Openreach deployed full-fiber broadband to a record 4.8 million premises during the year, including 1.5 million in Q4, bringing the total FTTP footprint to 23 million premises, equivalent to roughly two-thirds of the UK. Fiber customer connections surpassed 9 million, resulting in a 39 percent take-up rate.
Network reliability improvements also supported profitability gains. BT reduced network faults across fiber and copper infrastructure by 18 percent, lowering operational maintenance costs and improving service efficiency.
The Consumer division reported a 2 percent decline in revenue due to weaker handset demand, although adjusted service revenue stabilized and returned to growth during the second half of the fiscal year. BT also achieved customer growth across all three core consumer product categories for the first time in eight years.
Fixed-mobile convergence continued to improve through the EE One platform, with 27 percent of customers now taking at least two services, up 2 percentage points year-over-year. While overall consumer ARPU remained slightly lower amid aggressive retail competition, underlying broadband ARPU improved due to fiber migration and higher-value connectivity packages.
Within the Business division, revenue declined 2 percent as legacy voice and PSTN services continued to contract. However, BT secured several large enterprise agreements, including contracts with BAE Systems and easyJet, helping offset legacy service declines.
BT’s International division remained affected by divestments, which reduced reported revenue by 7 percentage points and EBITDA by 11 percentage points. Despite this, the business generated £70 million in structural cost savings.
Capital expenditure for FY26 totaled £5.1 billion, approximately £100 million above guidance due to accelerated customer connection activity. However, management emphasized that BT has now moved beyond peak infrastructure investment.
As annual FTTP build activity declines from approximately 5 million homes annually to around 1 million homes by FY30, the company expects cash Capex to fall by well over £1 billion, significantly boosting long-term free cash flow generation.
BT’s transformation initiatives also delivered major operating efficiencies. The company achieved £580 million in annualized gross cost savings during FY26, bringing cumulative savings to £1.5 billion over the last two years.
Total workforce levels, including subcontractors, declined 7 percent year-over-year, while direct labor costs fell 10 percent. BT reiterated its long-term target of operating with a workforce profile of 75,000 to 80,000 employees.
Energy efficiency improvements also contributed to lower operating expenditure. BT reduced total energy usage by 6 percent after shutting down its legacy 3G network and optimizing 2G infrastructure operations.
Another major milestone was the closure of BT’s first legacy copper exchange site at Deddington. The wider copper exchange shutdown strategy ahead of 2031 lease expiries is expected to unlock substantial real estate savings, lower energy consumption, and reduce maintenance complexity.
To support fiber deployment financing and protect working capital, BT also forward-sold redundant copper inventory, allowing the company to lock in commodity prices while monetizing legacy network assets.
BABURAJAN KIZHAKEDATH