Britain's BT has reached a deal to pay down the 4.1 billion-pound deficit on its staff pension fund more quickly than previously planned, resolving a long-running concern for investors and clearing the way for potentially higher dividends.
Shares in the former state telecoms monopoly leapt to a four-year high after it said on Friday it had agreed with the BT Pension Scheme's trustee that it would start clearing the deficit immediately with a top-up payment of 2 billion pounds ($3.16 billion) by the end of this month.
The group, which had previously relied on cost cuts and improved efficiency to drive cash generation, said it would then be able to make lower annual contributions for the next nine years of 325 million pounds, compared with its previous goal of clearing the deficit over 17 years. Analysts said the new deficit estimate for the scheme - the country's largest private pension scheme - was also less than expected, in an announcement that was widely welcomed by investors, unions and credit ratings agencies.
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