BT Group Updates FY27 Financial Guidance After Agreeing Verizon International Joint Venture

BT and Verizon Agree 50:50 International Joint Venture

BT Group confirmed on 29 June 2026 that it had reached an agreement with United States telecommunications giant Verizon to merge their respective international operations into a single, new 50:50 jointly owned company. The new entity is described in the announcement as being focused on multinational connectivity, serving large organisations that require seamless cross-border communications infrastructure and related services. The announcement states that BT's International division currently serves multinational organisations headquartered outside the United Kingdom and overseas public sector customers.

The strategic rationale behind combining these businesses centres on scale and competitive positioning in the global enterprise connectivity market. By pooling resources and networks with Verizon — one of the world's largest telecommunications operators — BT is signalling that it believes a larger, jointly operated international business will be better placed to compete for contracts with major corporations and governments that require complex, multi-country connectivity solutions. The financial terms of the joint venture arrangement beyond the equal ownership structure were not disclosed in this particular announcement.

International Division Reclassified as Discontinued Operation Under Accounting Standards

A critical consequence of the joint venture agreement is that BT's International division will now be reported as a discontinued operation in the company's financial accounts from the date of this announcement until the transaction formally completes. This is a standard accounting treatment under IFRS 5 — Non-current Assets Held for Sale and Discontinued Operations — which requires that assets and operations earmarked for disposal or combination be separated from the results of the continuing business. The five non-core divestments that BT completed within its International segment during FY26 are also captured under this reclassification.

The practical consequence for investors and analysts is that BT's reported financial results going forward will exclude International division contributions from continuing operations metrics. This makes like-for-like comparisons with prior periods more complex, and analysts will need to remodel their forecasts accordingly. BT has provided a reference point to assist with this: company-compiled consensus estimates for BT International, published on 19 June 2026, show FY27 adjusted revenue of £1,821 million and FY27 adjusted EBITDA of £108 million for the International business — figures that are now excluded from BT's continuing operations guidance.

Revised FY27 Group Revenue Guidance Reflects International Exclusion

With the International division removed from continuing operations, BT's adjusted group revenue guidance for FY27 has been revised downward to a range of £17.1bn to £17.6bn, compared with the previous guidance range of £19.0bn to £19.5bn. The difference of approximately £1.9bn in the midpoint broadly reflects the revenue contribution from International operations that is now reclassified. The announcement notes that mid-term guidance for adjusted group revenue remains "sustained growth," consistent with BT's previous long-term targets.

Importantly, BT's adjusted UK service revenue guidance remains entirely unchanged. The company continues to target adjusted UK service revenue of between £15.1bn and £15.4bn for FY27, with the mid-term target also described as "sustained growth." This figure covers BT's Consumer, Business, and Openreach customer-facing units, which together represent the core of BT's domestic operations and the primary driver of its long-term value creation narrative. The stability of this guidance line will likely reassure investors focused on the fundamental health of BT's UK business.

EBITDA Outlook Adjusted but Growth Trajectory Maintained

On the adjusted EBITDA line, BT has revised its FY27 outlook to reflect "growth ex-International" in the range of £8.1bn to £8.2bn, compared with the previous guidance of "growth" to £8.2bn–£8.3bn. The International segment's consensus EBITDA of £108 million for FY27 — as referenced in the announcement — broadly explains the narrowing of the range and the modest step down in the absolute figure. The wording "growth ex-International" is deliberate, indicating that even on the restated basis, BT expects the continuing business to deliver Earnings progression year-on-year.

The mid-term EBITDA guidance is described in the announcement as "sustained growth ahead of UK service revenue, enhanced by cost transformation." This language is unchanged from prior guidance and underscores BT's continued commitment to its multi-year cost transformation programme, which has been a central plank of management's strategy for improving margins and generating free cash flow. Investors focused on the Operating Leverage potential of BT's continuing business will note that the cost reduction ambitions remain fully intact irrespective of the joint venture transaction.

Capital-expenditure/">Capital Expenditure Guidance and BT's Infrastructure Investment Programme

Capital expenditure guidance excluding spectrum has been refined slightly, with BT now guiding to a range of £4.2bn to £4.3bn for FY27, compared with the previous point estimate of approximately £4.3bn. The modest reduction in the top end of guidance likely reflects the removal of International-related capital expenditure from the continuing operations figure. The mid-term capex trajectory guidance remains unchanged: BT expects capital expenditure to reduce by more than £1.0bn from FY26 levels over the medium term.

This declining capex trajectory is a fundamental feature of BT's investment story. The company has been investing heavily in its full-fibre broadband rollout through Openreach and in its 5G mobile network, with peak capital expenditure now expected to be behind it. As these major network build programmes mature and the intensity of investment recedes, BT anticipates generating significantly improved free cash flow — a key driver of the mid-term free cash flow target and the medium-term dividend policy. The joint venture transaction does not appear to alter this structural capex dynamic for the continuing business.

Normalised Free Cash Flow Guidance Held at Approximately £2.0bn for FY27

One of the more reassuring elements of the updated guidance for investors will be the unchanged normalised free cash flow target. BT continues to guide for normalised free cash flow of approximately £2.0bn for FY27, a figure that remains identical both on the prior basis including International and on the new basis excluding it. The announcement does not provide a detailed reconciliation explaining this equivalence, but the inference is that the International division's net contribution to group free cash flow was minimal — consistent with the relatively modest EBITDA figure of £108 million referenced in the company-compiled consensus.

The mid-term normalised free cash flow target also remains unchanged at approximately £3.0bn by the end of the decade. This ambition is central to BT's capital allocation framework and underpins both its dividend policy and the potential for enhanced Shareholder distributions over time. Retaining this target despite the structural change to the group's composition sends a clear message that management views the joint venture as neutral to, or potentially supportive of, BT's longer-term cash generation profile once the transaction completes and the business is repositioned.

BT's Dividend Policy Unchanged, with Path Towards Enhanced Distributions Set Out

BT's dividend guidance remains unaltered by the joint venture announcement. The company continues to target low to mid-single digit dividend growth for FY27, with the mid-term dividend policy also guiding to low to mid-single digit growth until the company achieves Balance Sheet metrics consistent with a BBB+ Credit rating. The announcement states that once these metrics are reached, residual cash flow will become available for enhanced distributions to shareholders — a statement that has been a consistent feature of BT's capital allocation messaging.

For income-focused investors, the consistency of the dividend growth guidance despite the significant structural change to the group will be a point of interest. BT's ability to maintain and grow its dividend is closely tied to the free cash flow trajectory, and with the £2.0bn FY27 and £3.0bn mid-term free cash flow targets held firmly in place, the financial underpinning of the dividend policy appears intact. Investors may be watching whether the joint venture, once operational, provides any incremental cash flow or strategic value that could accelerate the path towards enhanced distributions beyond the stated mid-term timeline.

BT International's Financial Footprint: Context for the Reclassification

To contextualise the scale of the business being contributed to the joint venture, the announcement references company-compiled consensus estimates published on 19 June 2026. These show BT International generating FY27 adjusted revenue of £1,821 million and FY27 adjusted EBITDA of £108 million. These figures represent the market's collective expectation for the division's near-term financial performance and provide the clearest indication of the earnings and revenue streams that will sit outside BT's continuing operations reporting going forward.

The relatively slim EBITDA Margin implied by these consensus figures — the company did not disclose the precise margin percentage in the announcement — highlights the operational challenges that have historically characterised BT's international enterprise business, operating in a competitive global market against well-capitalised rivals. The strategic logic of combining with Verizon's international operations may therefore partly rest on the premise that scale and shared infrastructure can improve margins within the combined entity, even if those improvements will not directly flow into BT's continuing operations income statement until the joint venture's earnings are reported as an associate or joint venture contribution.

Implications for BT Group's Continuing Business Structure and Reporting

With the International division now classified as a discontinued operation, BT's continuing group will be structured around three principal customer-facing units: Consumer, which serves individuals and families in the United Kingdom; Business, which covers companies and public sector customers domestically; and Openreach, the independently governed wholesale fixed access infrastructure Subsidiary that serves over 700 communications providers across the UK. Together, these three units represent BT's core strategic assets and the primary focus of management attention and capital allocation going forward.

The simplification of BT's reporting structure may itself be welcomed by some investors and analysts who have long argued that the International division complicated valuation of the core UK business. By effectively ring-fencing International into a separately reported discontinued operation — and eventually into a 50:50 joint venture — BT is creating a cleaner line of sight into the financial performance of Consumer, Business, and Openreach. The immediate share price impact was not clear from available public information at the time of this announcement, but the structural simplification and the maintenance of key financial targets are factors that investors and analysts will be assessing as they digest the full implications of the transaction.

Completion Timeline and Ongoing Investor Considerations

The announcement does not specify a target completion date for the formation of the BT-Verizon joint venture, nor does it detail the regulatory approval processes that will be required before the transaction can close. Given the cross-border nature of the combination — involving two major international telecommunications operators with operations spanning multiple jurisdictions — it is reasonable to anticipate that a range of competition and regulatory reviews may be necessary before the new entity becomes operational. The company did not disclose this timeline in the announcement.

Investors monitoring this transaction will therefore be watching for further updates on regulatory progress, any additional financial detail regarding the structure and governance of the joint venture, and BT's quarterly trading updates, which will increasingly reflect the new continuing operations shape of the group. BT has committed to keeping the market informed, and the provision of updated guidance tables and the reference consensus figures for International in this announcement reflects the company's intent to provide transparency during the transition period. Those following BT.A on the London Stock Exchange should continue to monitor official company announcements for material developments regarding the joint venture's progress towards completion.